Daewoo: $1 Billion In One Week Prompts Target Revise

Daewoo Shipbuilding has raised its 2001 order target to $3.7 billion from $2.5 billion, and said it was unlikely to accept orders in the second half because of its bulging order book, particularly for LNG carriers.

"So far this year, we have received $2.6 billion in shipbuilding orders," said S.W. Lee, a Daewoo spokesman. "We also have order options worth $1.1 billion. "What is surprising is $1 billion worth of orders came in just last week," Lee said. Latest orders include four 6,750 TEU containerships ordered by NVA of Germany and an LNG carrier ordered by a North European shipowner that Daewoo officials declined to identify. Daewoo, the world's second largest shipyard, has secured eight orders for LNG carriers so far this year, including letters of intent, with six options, Lee said. Lee said Daewoo was unlikely to accept new orders in the second half as its backlogged orders, at $7.8 billion, were enough to keep its yard fully occupied for the next three years.

"We think it is better not to have more orders this year unless they are extremely attractive," Lee said. Gas carriers, regarded as high value-added ships, are priced at around $165 million each, about twice the price of a very large crude carrier (VLCC). In 2000, Daewoo Shipbuilding won six of the 14 LNG carrier orders placed worldwide. Daewoo has been able to thrive in the LNG carrier market because its membrane-type model has emerged as a favorite. Unlike moss-type models, where the globe-shaped gas tankers on the ship interfere with the sight of crew members, the membrane-type vessel looks like an ordinary bulk carrier.

Daewoo has also reinforced the advantages of the ship by double-insulating gas compartments, a feature other shipbuilders have yet to adopt. "Daewoo's efforts to focus on high value-added LNG (liquefied natural gas) carriers has begun paying off," said Song Sang-hoon, analyst at Dongwon Securities. "Daewoo's prowess in the LNG ship segment is likely to continue for some years." Last week Daewoo Shipbuilding reported earnings of 100.4 billion won ($77.73 million) before taxes during the first quarter, on sales of 682.7 billion won. In the October-December quarter, the company reported a profit of 76.5 billion won on sales of 781.5 billion.

The former shipbuilding unit of the bankrupt Daewoo Group, along with 11 other Daewoo firms, was rescued by creditors in August 1999 after its investments in sister firms turned sour. Under a debt-rescheduling scheme, creditors led by state-run Korea Development Bank increased paid-in capital in Daewoo Shipbuilding to 992 billion won via 766 billion won in debt-to-equity swaps. - (Reuters)