South Korea’s major shipbuilders, led by Hyundai Heavy Industries Co., logged massive losses in the third quarter of the year, largely due to a series of order cancellations and a delay in the construction of offshore facilities, industry data showed Thursday (Nov 5).
According to the data, the country’s big three shipyards — Hyundai Heavy, Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. — racked up a combined operating loss of 2.1 trillion won ($1.85 billion) during the July-September period.
Originally, Hyundai Heavy reported an operating loss of 678 billion won for the third quarter but revised the figure to a loss of 898 billion won due to an order cancellation. Samsung Heavy also reported an operating loss of 10 billion won for the third quarter, a shift from its earlier estimate of an operating income of 85 billion won.
Daewoo Shipbuilding also reported an operating loss of 1.22 trillion won as it set aside provisions against potential order cancellations and increased costs.
The combined operating loss by the country’s big three shipyards is estimated at 7.8 trillion won for the year, marking the first time the top three shipyards have suffered operating losses on an annual basis.
In the current quarter, the shipyards are expected to suffer additional losses as the industry faces a protracted slump. Industry sources said the local shipbuilders are likely to see an improvement in their bottom lines starting in the second half of 2016.