Samsung Heavy to shift to operating profit in 2019: CEO

The head of Samsung Heavy Industries Co. said the major South Korean shipbuilder could post an operating profit next year, boosted by increasing order volume and reduced fixed costs.

Samsung Heavy CEO Nam Joon-ou said improving demand could drive orders to US$8.2 billion in 2018, compared with $6.9 billion in 2017.

In 2016, Samsung Heavy bagged $500 million worth of orders, only 10 percent of its target figure for the year, due to an extended slump in the shipbuilding industry.

Nam also said the company could post an estimated 7 trillion won ($6.5 billion) in sales in 2019, compared with an estimated 7.9 trillion won in 2017.

“We will achieve an operating profit next year at any cost,” Nam said in his first news conference since becoming the top executive of Samsung Heavy.

In December, Samsung Heavy said its operating losses in 2018 could narrow to 240 billion won from an estimated 490 billion won in 2017.

The CEO also said the company could succeed in its plans to raise 1.5 trillion won (US$1.3 billion) by issuing new shares, citing a recovery in the shipbuilding industry, expected to begin next year.

The capital increase, set to be concluded by May, is aimed at paying corporate bonds and other debts that mature in 2018, as well as preemptively responding to an additional reduction in borrowings in the financial sector, due to worsening performance.

South Korean shipbuilders have struggled with an oversupply of vessels and declining orders since the 2008 financial crisis.

Nam then said that all employees can join the company-wide efforts to cut fixed costs by agreeing to cut their basic pay by 10 percent, without giving a specific time frame.

The shipbuilder based in Geoje, some 470 kilometers southeast of Seoul, currently has 11,500 employees.

Samsung Heavy Industries has recently cut the number of its executives to 50 from 72 in a reshuffle.
Source: Yonhap