SEOUL, May 16 (Korea Bizwire) – Overseas operations of South Korea’s cash-strapped shipyards struggled with massive debts last year amid a protracted slump in the global shipbuilding industry, industry data showed Sunday.
The combined debts of 34 overseas subsidiaries of the three major shipyards — Daewoo Shipbuilding & Marine Engineering Co., Hyundai Heavy Industries Co. and Samsung Heavy Industries Co. — reached 5.36 trillion won (US$4.58 billion) last year, up 28.7 percent tallied in 2010, when the shipbuilding industry enjoyed its heyday, according to the data compiled by local market researcher Chaebul.com.
Daewoo Shipbuilding’s overseas businesses posted 2.18 trillion won in debt, up 43.2 percent over the five-year period, while Samsung Heavy saw the figure nearly triple to 1.26 trillion won. Debts of Hyundai Heavy subsidiaries, on the other hand, fell 13.4 percent to 1.91 trillion won.
As a result, their debt ratio reached an average 548.9 percent last year, compared with 266.1 percent recorded five years earlier. The latest findings showed nearly 50 percent of the 34 overseas affiliates posted a debt ratio of more than 200 percent.
The debt ratio of Hyundai Heavy’s Vietnam unit soared to 6,250 percent last year, while the Nigerian unit of Samsung Heavy registered a debt ratio of a staggering 3,234.3 percent.
Meanwhile, the overseas corporations swung to the red last year for the first time in five years, posting combined net losses of 733 billion won last year.
Loss-making South Korean shipyards are undergoing creditor-led debt-restructuring with rising pressure from the government. They are ratcheting up moves to reduce their workforces and sell noncore assets in order to lower costs.
The shipbuilding industry, once regarded as the backbone of the country’s economic growth and job creation, has been reeling from mounting losses caused by an industrywide slump and increased costs.
The Big Three shipyards racked up a combined net loss of 7.7 trillion won last year. It was the first time that all three of the nation’s largest industry players registered losses.