The shipbuilders’ total debt increased from 90.5 trillion won in 2011 and 97.9 trillion won in 2013 to 101.5 trillion won in 2014, and finally 102.6 trillion won in 2015. (image: KobizMedia/ Korea Bizwire)
SEOUL, May 30 (Korea Bizwire) – The accumulated debt for Korea’s top 9 shipbuilding companies – companies with more than 1 trillion won in revenue – has exceeded 100 trillion won. According to chaebul.com Sunday, the top 9 companies’ debt exceeded 102.6 trillion won in 2015.
The figure tallies up all debt from the 9 companies, including Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering, and Samsung Heavy Industries, as of December 2015.
The shipbuilders’ total debt increased from 90.5 trillion won in 2011 and 97.9 trillion won in 2013 to 101.5 trillion won in 2014, and finally 102.6 trillion won in 2015.
The company with the biggest increase was Daewoo Shipbuilding & Marine Engineering, which saw debt soar from 12.1 trillion at the end of 2011 to 18.6 trillion won by 2015 (53.1 percent). Hyundai Heavy’s debt increased by 3.4 trillion won (11.1 percent), and Samsung Heavy’s by 1.2 trillion won (10.8 percent).
With prolonged poor performance in the shipbuilding sector, the top 9 companies’ debt increased further by over 1 trillion won in Q1 2016.
The financial health of the 9 companies has been endangered since 2013, when they had an average debt ratio of 290.3 percent. The figure has since rapidly increased to 360.4 percent in 2014 and 471.5 percent in 2015. In particular, Daewoo Shipbuilding saw its debt level skyrocket from 270 percent in 2011 to an astonishing 4265.8 percent in 2015.
The 2015 year end debt ratios for Samsung Heavy and Hyundai Heavy were 305.6 percent and 220.9 percent, respectively.
“The delayed restructuring efforts by the companies, the government, and the creditors have intensified the fragility of the shipbuilding industry,” said Jung Seon-seop, CEO of chaebul.com.
Criticism has also been directed at the government and its lack of leadership.
“The government is largely responsible for neglecting the industry despite its knowledge of the industry’s frailty,” said Kim Sang-jo, a professor at Hansung University, who is also the head of Solidarity for Economic Reform. “It’s still not too late for the government to thoroughly analyze the problem and establish a command post that could actively lead the reorganizational efforts.”
By Kevin Lee (kevinlee@koreabizwire.com)
