Korean Shipbuilding Profits Surge

Korean shipbuilders are enjoying high financial times, powered by historically high ship prices and recent steel price reductions. Hyundai Heavy Industries Co., the world's largest shipbuilder, posted its fourth-consecutive quarterly profit on increased orders for more expensive ships. Net income totaled 22.9 billion won, or $24.4 million, in the three months ending March 31, compared with a loss of 88.95 billion won in the same period a year earlier, Hyundai Heavy said in a regulatory filing to the nation's financial watchdog, according to a report in the Korea Herald.

Global ship prices for very large crude oil carriers rose 39 percent to $110 million per vessel at the end of 2004 from $79 million at the beginning of 2004, Hyundai Heavy said in a statement. Prices for container ships which can carry 6,200 TEU rose 24.6 percent to $91 million per ship at the end of 2004 from the beginning of 2004. Hyundai Heavy's operating profit, or sales minus expenses and the cost of goods sold, was 167.9 billion won in the first quarter, compared with an operating loss of 74.2 billion won a year earlier.

Samsung Heavy Industries Co. reported that its first-quarter net profit jumped 440 percent compared to a year ago, rising to 15.3 billion won on increased orders for high value-added ships.

Daewoo Shipbuilding & Marine Engineering Co. fell short of Hyundai and Samsung in the first quarter with an earnings loss of 141.5 billion won, but its prospects are also bright with increasing orders for costly LNG carriers and offshore engineering facilities.

Korean shipbuilders are faring well on the global market for high value-added offshore facilities worth between $500 million and $1 billion per unit. Nearly three out of four orders for LNG carriers were won by Korean shipbuilders, according to the local trade association.

Korean shipyards ranked No. 1 through No. 7 in order backlogs as of the end of April, a London-based market researcher said last week. Hyundai Heavy kept its spot as the world's No.1 shipbuilder in order backlogs of 11.44 million compensated gross tons, Clarkson Plc. said. Samsung Heavy overtook its rival Daewoo with an order backlog of 8.34 million CGTs.

STX Shipbuilding Co. was the sixth largest worldwide for the third consecutive month with an order backlog of 2.39 million CGTs. Bringing up the rear was Hanjin Heavy Industries & Construction Co., which climbed up a notch to rank No. 7 with an order backlog of 2.12 million CGTs.

(Source: The Korea Herald)