Singapore: Daewoo Shipbuilding & Marine Engineering Co, the world’s second-largest shipbuilder, posted its second straight quarterly loss as a slump in oil prices increased costs for its offshore operations.
The third-quarter loss was 1.35 trillion won ($1.2 billion; Dh4.37 billion), compared with a 35.5 billion-won profit a year earlier, the company said in a regulatory filing Tuesday. That’s wider than the average 95.2 billion-won loss of eight analyst estimates compiled by Bloomberg. In the second quarter, Daewoo Shipbuilding posted a loss of 2.3 trillion won, its biggest ever.
Customers increasingly are asking global shipyards to delay delivery of ships and offshore rigs as weaker economic growth and sluggish oil prices make it difficult for them to pay for the projects.
“The company reflected additional losses the creditors found in their due diligence, as well as loss from its overseas subsidiaries,” Daewoo Shipbuilding said in an emailed statement. “Earnings should start to improve in the fourth quarter if the creditors provide funds as planned.”
Offshore move
Daewoo Shipbuilding, Samsung Heavy Industries Co and Hyundai Heavy Industries Co, the world’s three biggest shipyards, shifted toward building floating facilities for drilling and production when the global financial crisis hit ship orders. Now they’re pulling back from that business after the drop in oil prices since last year prompted companies such as Royal Dutch Shell Plc and Petroleo Brasileiro SA to cut spending.
Daewoo Shipbuilding’s operating loss in the third quarter was 1.22 trillion won, compared with a 135 billion won profit a year earlier. That exceeded analysts’ estimate for a 93.6 billion-won loss on average, according to Bloomberg data.
Daewoo Shipbuilding is the worst-performing stock on the Kospi 200 index this year as project delays have forced it to take on more debt. The shipbuilder is selling non-core assets, reducing its operational presence at a money-losing Romanian shipyard and cutting its workforce to help raise cash.
Korea Development Bank and Export-Import Bank of Korea started reviewing Daewoo Shipbuilding’s management and long-term business plans in July to find out how much money the shipyard might need. Daewoo Shipbuilding is selling its headquarters building, a golf course and wind energy business to raise cash.
The creditors will announce measures, expected to include as much as 4.3 trillion won in additional funds, on Thursday, Yonhap reported, citing a statement from Korea Development Bank.
