S. Korea's "Big 3" Shipbuilders and Shippers Achieve H1 Target

South Korea’s major shipbuilding and shipping companies are found to have registered earnings exceeding their initial targets in the first half of this year. According to a source from the industry on Monday, the “Big Three” shipbuilders such as Hyundai Heavy Industries (HHI), Daewoo Shipbuilding and Marine Engineering (DSME) and Samsung Heavy Industries (SHI) have already secured orders over 50% of the annual contract goals for the year of 2010 in the first half (H1).
In addition, the major three shipping companies such as Hanjin Shipping, Hyundai Merchant Marine (HMM) and STX Pan Ocean have achieved the goal of turnaround in earnings in H1, and expect an earnings surprise in the second quarter of 2010.
HHI, which had failed to win shipbuilding orders in H1 of 2009, won shipbuilding orders for 27 units worth $1.5 billion in H1 of this year. The company successfully secured new shipbuilding orders worth $7.5 billion in its six businesses until last May, or saw an approximately three-fold increase from the same period last year.
Furthermore, when the construction project for the gas-fired power plant worth $1.6 billion from Saudi Arabia is included, the total amount of HHI’s contracts surpasses nine billion dollars. The figure stands well above a half of this years’ new contract target of $17.7 billion. When only the amount of new orders in the shipbuilding, shipping and plant construction businesses are taken into account, the company, so far, has received orders worth $5.9 billion out of the goal of hitting $10.2 billion this year.
Also, DSME and SHI are expected to hit a half of the annual target in H1 without difficulties. DSME, known to have set an annual goal of winning orders worth $10 billion this year, has won shipbuilding orders of 27 vessels worth three billion dollars year-to-date. In addition to this, as DSME will soon conclude contracts for building the Floating Production Storage and Offloading (FPSO) facility for deepwater oil developments in Angola worth $1.6 billion as well as building eight oil tankers worth $500 million to $600 million, the company expects to win orders exceeding five billion dollars.
Samsung Heavy Industries`(SHI) performance is also approaching close to four billion dollars, half of its contract goal in 2010. It has taken over the construction of 29 vessels for 3.3 billion dollars. As SHI is expected to win more tankers by the end of this week, the target amount will be easily obtained.
In addition to the "Big Three" players, Hyundai Mipo Dockyard won projects worth 2.16 billion dollars which is equivalent to 94% of its annual goal of 2.3 billion, while Hanjin Heavy Industries and Constructions (HHIC)`s Subic Shipyard in the Philippines has won 21 vessels so far this year.
Furthermore, outstanding performances of large shipping companies are noteworthy. Overcoming the worst operating losses in 2009, the "Big Three" companies in the shipping industry including HHIC, Hyundai Merchant Marine(HMM), and STX Pan Ocean, successfully achieved a turnaround in Q1, and their operating profits are forecasted to grow greatly during Q2.
Specifically, HHIC and HMM`s Q2 operating profits are to pass the 150 billion won (US$ 128 million) mark, thanks to a revival in the container ship market and a fare increase in the North American region since May. Previously, the two firms had recorded net operating losses of 942.5 and 565.3 billion won, respectively, in 2009.