South Korean big three hit hard in second quarter

Korean shipbuilding giants Hyundai Heavy Industries (HHI), Daewoo Shipbuilding and Marine Engineering (DSME) and Samsung Heavy Industries (SHI) suffered huge losses in the second quarter of 2015 amid dwindling appetite of owners to order new ships.

The world’s largest shipbuilder Hyundai Heavy Industries disclosed a net loss of KRW 242 billion or USD 209 million in the second quarter of the year. HHI’s loss for the same period in 2014 amounted KRW 616 billion.

Even though the shipbuilder managed to reduce losses from last year thanks to its cost cutting efforts; severance pay and a special bonus estimated at KRW 96.7 billion pushed them to the red for the seventh quarter in a row.

Daewoo Shipbuilding had an operating loss of KRW 2.39 trillion or USD 2.1 billion, confirming media predictions that saw the shipbuilder’s shares dive by 30 percent earlier this month.

DSME shares have made a significant comeback after the Korean shipbuilder stepped up its restructuring efforts, which are to include selling off underperforming subsidiaries.

The shares’ value rose swiftly following announcements that Korea Development Bank, DSME’s largest shareholder, would buy KRW 1 trillion (USD 863.4 million) of equity and offer 1 trillion won in new loans.

Samsung Heavy Industries posted an operating loss of KRW 1.55 trillion or USD 1.3 billion and a net loss of KRW 1.15 trillion in the second quarter.

The shipbuilders’ losses stem from a plunge in prices of vessels and offshore facilities, along with low oil prices that have negatively affected the number of orders for drillships and offshore facilities, as international oil majors are shying away from new orders and cutting their capital expenditures.

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