Korea Shipbuilding & Offshore Engineering (KSOE) remains in the red as order cancellations and rising material costs take their toll.
In a regulatory filing, the South Korean group reported an operating loss of KRW 265.1bn ($203m) for the second quarter, despite a 7.2% increase in sales to KRW 4.19trn from the previous three months.
It registered $507m of losses for the first half, including a first-quarter operating loss of KRW 396.4bn.
KSOE cited lower-priced vessels and rising steel plate costs, plus the cancellation of three LNG carrier newbuildings from Sovcomflot as the reasons for the losses. Worker accidents at Hyundai Samho Heavy Industry also attributed to increased operating costs.
However, KSOE is expecting a turnaround on its earnings for the rest of the year as it embarks on building value-added vessels and higher-price newbuildings.
Shipbuilding sources said there are signs that the cost of steel plates may fall, as some South Korean steel mills are looking to reduce their prices on stagnant demand. This will lower shipyards’ operating costs.
KSOE, a subsidiary of HD Hyundai — previously known as Hyundai Heavy Industries Holdings — is the holding company for Hyundai Heavy Industries, Hyundai Samho and Hyundai Mipo Dockyard.
KSOE’s website shows it has contracted orders to build 124 commercial ships worth $13.43bn so far this year, almost achieving its target of $15.05bn.
Meanwhile, HD Hyundai reported that its net profit soared 43 times in the second quarter from a year earlier on the exceptional performance by its oil refining unit, Hyundai Oilbank.
The refiner posted an operating income of KRW 1.37trn on sales of KRW 8.8trn on improved refining margins and an increase in the value of its stockpiles due to rising crude prices.
According to Yonhap news, HD Hyundai’s sales increased 149% year on year to KRW 15.75trn, with operating income surging 570% to KRW 1.24trn.
The consolidated net profit of the conglomerate came to KRW 957.5bn between April and June, up 4,292% from a year earlier.
