Korean shipbuilding industry is said that performance differentiation among companies is expected to continue in the second quarter of this year.
Analyst Park Min at Korea Investment & Securities said, “The performance differentiation which has been going on from last year is prospected to be seen in the second quarter of this year,” and expected, “Samsung Heavy Industries which posted records exceeding market estimate will see operating profits surpassing market consensus in the second quarter as well.”
Park explained that Samsung has a low possibility to see performance changes since drillship segment, with stable and high profitability, accounts for 40% of total revenue.
As for Daewoo Shipbuilding & Marine Engineering, the builder’s operating profits of Q2 might meet up with the consensus however there are still chances that profits are likely to change depending on results of subsidiaries’ appropriation issue.
Hyundai Heavy Industries, by the way, it is expected to announce its Q2 performance which falls short of market expectation due to declined profits from Hyundai Oilbank under fall of oil price with a revenue recognition of low price orders.
Hyundai Mipo Dockyard is also under a difficult situation where it is hard to escape operating losses even in the second quarter as the recognition of low price orders continues, said the analyst.
Meanwhile, Analyst Han Yeong-Soo at Samsung Securities of Korea forecasted, “Orders signed at a boom period before 2008 are now almost gone in orderbooks of major shipbuilders. Considering that newbuilding prices have not bounced back after 2009, the improvement of performance is hard to be seen in the second half of the year as seen from the second quarter.”
Han continued, “Even if the newbuilding prices rebound takes longer, profitability improvement is feasible during constructions of vessels ordered after 2011. Thus, shipbuilders’ profitability will gradually improve from next year.”