SEOUL, Jan. 23 (Korea Bizwire) – Hyundai Heavy Industries Co. and its two local rivals — Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. — are estimated to have recovered last year from their worst-ever performance the previous year, industry sources said Monday.
But their improved earnings may have come from their relentless efforts to cut costs through workforce reduction and asset sales, they said.
According to FnGuide, an industry tracker, Hyundai Heavy, the No. 1 shipbuilder, is expected to have logged an operating income of 1.64 trillion won on sales of 38.55 trillion won last year.
In 2015, the shipyard suffered an operating loss of 1.54 trillion won on sales of 46.23 trillion won, hit by increased costs stemming from a delay in the construction of ships and order cancellations.
Hyundai Heavy, which also suffered a record loss of 3.25 trillion won in 2014, is expected to have benefited from an equity gain with its oil-refining unit, Hyundai Oilbank Co., and its cost-cutting measures, the sources said.
Samsung Heavy is forecast to have racked up an operating loss of 116 billion won on sales of 10.55 trillion won in 2016, compared with an operating loss of 1.5 trillion won and sales of 9.71 trillion won the previous year.
Samsung Heavy’s estimated narrowed loss is forecast to have stemmed from shaking off its potential losses related to its offshore facility projects from its balance sheet.
Daewoo Shipbuilding is expected to have logged an operating loss of 528 billion won on sales of 13.12 trillion won last year, according to Daishin Securities, which compares with an operating loss of 2.94 trillion won and sales of 15 trillion won the previous year.
But the industry sources said Daewoo Shipbuilding’s operating loss may be bigger than expected due to tightened accounting. In the first nine months of the year, the shipyard suffered an accumulated loss of 590 billion won.
South Korean shipbuilders have been under severe financial strain since the 2008 global economic crisis, which sent new orders tumbling amid a glut of vessels and tougher competition from Chinese rivals.
The country’s top three shipyards — Hyundai Heavy Industries, Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. — suffered a combined operating loss of 8.5 trillion won in 2015. The loss was due largely to increased costs stemming from a delay in the construction of offshore facilities and an industrywide slump, with Daewoo Shipbuilding alone posting a 5.5 trillion-won loss.
The shipbuilders have drawn up sweeping self-rescue programs worth 11 trillion won in desperate bids to overcome the protracted slump and mounting losses.