Hyundai Heavy Industries (HHI), Samsung HI (SHI), and Daewoo Shipbuilding & Marine Engineering (DSME) have all posted second-quarter losses.
Known as Korea’s ‘Big three’ shipbuilders, the trio revealed results on 29 July in line with analysts’ expectations they would all post shortfalls.
HHI’s loss of KRW241.1 billion (USD206.8 million) widened from a KRW138.8 billion deficit in the quarter last year, while SHI plunged into the red by KRW1.1541 trillion, reversing a KRW11.6 billion profit.
DSME reported a massive KRW2.3971 trillion loss, which had been expected after it admitted to keeping up to KRW3 trillion in offshore plant project losses off its balance sheet. The shipbuilder’s shortfall climbed from a KRW138.7 billion loss in the quarter last year.
Analysts have attributed the losses to a dearth of rig and drillship orders and delays in drillship deliveries.
For HHI, while benefiting from a weak won, a rise in merchant vessel orders is not expected to offset challenges in its other businesses. Hyundai Oilbank’s earnings are also expected to fluctuate with oil prices, heightening the volatility of HHI’s earnings.
SHI has been dealt a blow by a Nigerian court’s decision in May to suspend the Egina FPSO project, citing alleged contract breaches including SHI’s failure to establish a fabrication yard in Nigeria.
DSME’s sole positive factor is a high orderbook for LNG carriers, said Daishin Securities analyst Feynman Jeon.
The company could raise funds through a rights offering, he added.