Dongwon Economic Research Institute News

The shipbuilding unit of South Korea's troubled Daewoo Group expects a net profit and more profitable orders in 2001 as it charts a new, independent course. Daewoo Shipbuilding & Engineering Co, split off from troubled Daewoo Heavy Industries last October, said it aimed for net profit of $156.7 million this year, buoyed by strong global orders. "It looks certain that Daewoo Shipbuilding has a great business year ahead of it," said Song Sang-hoon, analyst at Dongwon Economic Research Institute. It also plans to repay 200 billion won of debt this year to free itself from a debt restructuring program undertaken by its creditors in 1999, Daewoo officials said. "Our losses in the past stemmed from problems of other Daewoo affiliates," shipyard spokesman Kim Do-kyun said.

South Korea's plan to sell a stake in Daewoo Shipbuilding to an Australian firm has stalled and other options to lure foreign capital are being considered, officials at Daewoo and its creditors said. Differences over how to value Daewoo's share price and how well qualified the Australian company is to hold a stake in a shipbuilding firm have helped stall the deal, they said. Newcastle, a company formed by Australia-based investors, expressed interest in Daewoo Shipbuilding early in 2000. Officials at Korea Development Bank (KDB), the main creditor of Daewoo Shipbuilding, said the bank's last official contact with Newcastle was in August. "The price the Australian company has in mind appears to be based on the concept that Daewoo Shipbuilding is a bankrupt company," said I.R.

South Korea's Hyundai Heavy Industries, the largest shipbuilder in the world, reported a first-quarter loss on Friday after it was hit by losses at sister firm Hyundai Petrochemical. But Hyundai Heavy said it would chalk up large profits by the end of the year, as a flood of backlogged orders would keep the yard busy for the next two and a half years. Hyundai Heavy said it incurred a 81.9 billion won ($62.92 million) net loss during the January-March period, compared to a net profit of 42.7 billion won a year earlier. The company said its EBIT (earnings before interest and taxes), or operating profit, during the first quarter of this year rose to 187.6 billion won, up 9.5 percent from the same period last year.

South Korea's Daewoo Shipbuilding & Marine Engineering is set to graduate this week from a creditors' debt rescheduling plan, a move that will shore up credit ratings for the world's second-largest shipbuilder. An early end to the plan was widely anticipated as the shipyard has shown a dramatic turnaround with a flood of new orders, creditors said on Monday. "The company's earnings performance has improved dramatically," said Yang Moon-suk, a spokesman for Korea Development Bank, the main creditor for the shipbuilder. "Working-level officials of creditors have already agreed that Daewoo Shipbuilding is now able to stand on its own and an announcement is due by Friday," he added.