South Korea’s Daewoo Shipbuilding & Marine Engineering made heavy losses in the first half of 2021, despite seeing an upswing in new orders during the six months.
DSME reported a net loss of KRW 1.3trn ($1.1bn) due to increased costs and allowances, as well as the low level of orders that were previously placed. It had made a KRW 294bn profit in the same period of 2020.
The company said the collapse in profits resulted from having to put aside KRW 800bn in allowances for legal disputes, plus increased costs from the rise in the price of steel plate. Sales fell 45% to KRW 2.17trn.
But DSME added that it also won new orders worth $6.3bn in the first six months of the year with containership demand strong in the period.
Further LNG carrier orders are expected, with the new orders already representing 82% of DSME’s $7.7bn annual target. This year’s orders are four times higher than a year ago.
DSME, which is waiting to merge with Hyundai Heavy Industries Holdings shipbuilding unit Korea Shipbuilding & Offshore Engineering (KSOE), added that it now has a two-year order backlog worth $21.6bn.
In July, the merger was delayed by three months to the end of September and the deadline could be extended again as it awaits European Union approval for the tie-up.
It was the fourth extension to the planned merger to create the world’s largest shipbuilder after the plan was agreed between DSME’s state-run creditor Korea Development Bank and KSOE in March 2019.
KSOE plans to take a 55.72% stake in DSME, but still needs anti-trust approval from the EU.
