South Korean shipbuilder DSME has posted a loss for 2019 as the dearth of new vessel orders hit home.
The world's third-biggest shipbuilder said on Tuesday that it finished KRW 46.5bn ($39m) in the red, against profit of KRW 320bn in 2018.
"The company began to build ships that were ordered (years ago) in low-priced deals and, with fixed costs increasing due to a decline in new orders, there has been a deterioration in profitability," DSME said in a regulatory filing.
The shipbuilder also set aside additional provisions related to an ongoing damage lawsuit filed by shareholders, the company added without giving further details.
Clarksons data shows 1,319 vessels ordered worldwide in 2019, down from 1,895 in 2018. Levels have fallen even further so far in 2020.
DSME expects uncertainties in global markets to continue to increase, with yards facing difficult conditions.
The operating profit plummeted 71% to KRW 292.8bn last year, from KRW 1.02trn in 2018.
Overall revenue was down 13% at KRW 8.36trn, versus KRW 9.64trn the year before.
Covid-19 complications
The company's order target for 2020 is $7.21bn. This compares to an actual figure of $6.88bn in 2018.
The yard did not provide quarterly earnings figures.
DSME will also have to contend with complications arising from the coronavirus this year.
TradeWinds reported last week that South Korean shipbuilders have notified owners of under-construction newbuildings that they could declare force majeure on their contracts because of delays caused by the Covid-19 coronavirus outbreak.
One owner who had received a letter from Samsung Heavy Industries, which buys in hull blocks from its SHI Ningbo yard in China, said it was a standard notification and something his company commonly received on its newbuildings.
DSME is also the subject of a takeover bid by bigger compatriot Hyundai Heavy Industries.
The competition implications of this are being investigated in a number of jurisdictions, most crucially Japan and the European Union.
