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KOREAN YARDS STILL SHOWING LOSSES, BUT CONDITIONS SHOULD IMPROVE

Monday, October 29, 2018 

Local market analysts say that South Korean shipyards are expected to post disappointing earnings for Q3 2018 despite the revival in new ship orders.

According to the Yonhap News agency, although local shipbuilders have successfully secured orders, the nature of the industry invariably leads to a time lag, so the financial gains will be factored in at a later date.

Of the three major players, Hyundai Heavy Industries and Samsung Heavy Industries are expected to report losses, while Daewoo Shipbuilding and Marine Engineering may show a surplus, said a South Korean brokerage specialist. Companies are struggling with fixed costs, weak prices for new ships and high raw material costs.

HHI is expected to be in the red by over 50 billion won, despite sales worth around 3 trillion won, while SHI is forecast to record sales of about 1.3 trillion won and a loss of 53 billion won. For DSME, sales about 2.2 trillion won, with a profit for the quarter of about 130 billion won. This company’s better performance is put down to a strong orderbook in 2014-2016 alongside efforts to cut costs and restructure operations.

It is thought conditions are likely to improve in the longer term, thanks to a strong forecast demand for gas carriers and an expected upturn in FPSO orders.

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