SEOUL, March 10 (Korea Bizwire) – Daewoo Shipbuilding & Marine Engineering Co., a troubled shipyard, is expecting its business to turn around this year following last year’s record loss, as it has fully reflected potential losses and its efforts to cut costs, its chief said Thursday.
The shipyard suffered a record 5.1 trillion won (US$4.24 billion) in losses last year due to increased costs from a delay in the construction of offshore facilities and order cancellations amid a prolonged slump in the global shipbuilding sector.
Net losses came at 5.13 trillion won last year, shifting from the previous year’s profit of 33 billion won, the company said in a regulatory filing.
“We are controlling losses related to offshore plants, and additional losses and uncertainties have been removed to some degree,” Daewoo Shipbuilding president Jung Sung-leep told reporters.
Daewoo Shipbuilding expects to log an operating income of some 500 billion won this year, and targets orders worth $10.8 billion this year. As of end-December, its order backlog totaled $45 billion, according to the shipyard.’
Chung said the shipyard would not seek any “drastic” cuts in workforce, but acknowledged the need to reduce workers.
He said the shipyard had shown stellar performances when the number of its workers hovers around 30,000. Currently, Daewoo Shipbuilding employs some 42,000.
The shipbuilder is seeking to sell 590 billion won worth of new stocks this year following last year’s 410 billion won.
In December, its shareholders approved a proposal to increase the ceiling of new stock issuance, the latest in a series of steps to improve its shaky financial status.
In November, its creditors, led by state-run Korea Development Bank, decided to provide 4.2 trillion won worth of financial aid to the shipbuilder.
In return, Daewoo Shipbuilding is seeking to cut costs and sell some affiliates and its headquarters office building in Seoul, saving 1.85 trillion won in cash.
Daewoo Shipbuilding closed at 6,180 won on the Seoul bourse, up 5.28 percent from the previous session’s close, while the broader market index, the KOSPI, jumped 0.84 percent.