DSME rebounds with strong profits

Deloitte executive arrested in Korea over Daewoo Shipbuilding fraud

South Korean shipbuilder Daewoo Shipbuilding and Marine Engineering (DSME) has managed to return to the black in the first quarter of 2017, following stringent self-rescue efforts which included workforce reduction and asset sales.

The company’s operating profit for the period bounced back to KRW 291.8 billion compared to an operating loss of KRW 38.1 billion.

A similar turnaround was reported for DSME’s net income which reached KRW 261.3 billion for the quarter ended March 31, 2017, against a net loss of KRW 3.4 billion seen in the same three-month period in 2016.

Although its profits increased, the company informed that its revenues dropped by 20 percent year-on-year to KRW 2.78 trillion from KRW 3.48 trillion reported in the first quarter a year earlier.

The financially troubled shipbuilder recently filed for a court approval for debt rescheduling after it secured the necessary consents for its latest KRW 2.9 trillion rescue plan, proposed by its main creditors Korea Development Bank (KDB) and Export-Import Bank of Korea (KEXIM).

An approval from the South Korea’s court would pave the way for the shipbuilder’s much needed financial boost. A decision on the matter is expected to be unveiled in early May.

DSME’s main debt holder, National Pension Service (NPS), which holds some 30 percent of the company’s corporate bonds, approved of the debt rescheduling on April 17. Later the same day, the company’s remaining investors gave their nod to the proposal.

The restructuring plan, revealed in late March 2017, sets out three key principles – debt restructuring should come first, financial assistance should follow later, and all stakeholders should bear the burden of losses.