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Monday, January 22, 2018

The Big Three News

South Korean Shipyards: Silver Lining for the Biggies

Photo:  Hyundai Heavy Industries Co., Ltd.

Though South Korea’s big three shipbuilders -Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering, and Samsung Heavy Industries - showing signs of fiscal recovery this year,  orders at midsized shipbuilding companies remain sparse. Korea Herald reported citing  Korea Export-Import Bank of Korea that the order receipts of medium-sized shipyards in Korea were estimated to be around $110 million in the first quarter. Despite an improvement compared to last year’s first quarter…

Bleeding Continues for Korean Shipbuilders

Photo: Hyundai Heavy Industries

South Korea's big three shipbuilders are set to post over 8 trillion won (US$6.66 billion) in operating losses in 2015 because the industry has not found a way out of a prolonged slump, reports Yonhap. According to the industry data, the top three shipyards - Hyundai Heavy Industries Co., Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. - are stung by a combination of a prolonged industry slump, a series of order cancellations and a delay in the construction of offshore facilities.

Korean Shipyards in Troubled Water

Photo: Hyundai Heavy Industries

Struggling with technology and a plunge in oil prices that has discouraged exploration, Korean vessel makers are racking up debt and could show billions of dollars in losses, reports Bloomberg. The Big Three shipbuilders in South Korea ventured into offshore oil rigs starting around 2010 with a goal to avoid direct competition with China. The idea appeared excellent then, with oil prices climbing toward $100 a barrel. Today the strategy seems to have backfired. The deep-ocean strategy is coming back to bite Korean shipyards.

STX Offshore in Deep Financial Crisis

Photo: STX Offshore & Shipbuilding

The South Korean shipyard STX Offshore & Shipbuilding is apparently close to a bankruptcy if not yard soon find new vendors who are willing to pump huge sums into the yard. Otherwise, there is the prospect of a collapse in the first half of the 2016th. STX Shipbuilding CEO Lee Byung-Mo recently sent a message to its employees, saying, “If we operate our company the way it is without special countermeasures, we will be short of funds worth hundreds of billions of won in the next three years.

Daewoo Shipyard Posts Q1 Operating Loss

Photo: Daewoo Shipbuilding & Marine Engineering Co

South Korean shipbuilder Daewoo Shipbuilding & Marine Engineering Co. posted a first-quarter loss after incurring more costs to finish some offshore projects. First-quarter operating loss came to 26.3 billion won ($22.8 million) , sharply narrowing from an operating loss of 1.06 trillion won in the last quarter of 2015, while sales plunged 21.6 percent on-year to reach 3.53 trillion won. Net profit came to 31.4 billion won (US$2.7 million) in the January-March period, compared with a loss of 1.12 trillion won in the previous quarter, the company said in a regulatory filing.

DSME Denounces McKinsey Report

Pic courtesy: VisitKorea

The report by Global consulting company McKinsey & Company that Daewoo Shipbuilding & Marine Engineering (DSME) is least likely to survive among the big three shipbuilding companies has brought about strong opposition from DSME. McKinsey Korea has issued its preliminary report on the state of South Korea's shipbuilding industry, and its conclusions are dire: McKinsey believes that Daewoo Shipbuilding and Marine Engineering may not survive past 2020, due to a forecast negative operating margin and a liquidity shortfall reaching as much as $3 billion.

Samsung Wins $1.26bln Contract from BP

Photo: Samsung Heavy Industries

Samsung Heavy Industries, South Korea's major shipyard, build a floating production unit for British oil multinational BP that will be used in offshore drilling in the Gulf of Mexico, says a report in Yonhap. The 1.5 trillion won ($1.26 billion) contract is the first for a floating oil production platform to be received by any of South Korea's big three shipbuilders in 18 months, according to Samsung Heavy. Under the deal with BP Plc, Samsung Heavy will build a floating production unit (FPU) by August 2020.

Samsung, Daewoo Merger on the Way?

Photo: Samsung Heavy Industries

As the Korea government is pushing for restructuring of the faltering shipbuilding industry, speculation grows over a possible merger between the country’s two major shipbuilders — Samsung Heavy Industries and Daewoo Shipbuilding and Marine Engineering, reports Korea Herald. South Korea's shipbuilding sector has been facing rough weather. The global economic slowdown is severely impacting the country's so-called big three in the industry: Hyundai Heavy Industries, followed by second-ranked Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries.

Korean Shipbuilders May Fail to Achieve Targets

Image: Daewoo Shipbuilding & Marine Engineering Co

South Korea's big three shipbuilders - Hyundai Heavy Industries Co., Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. -  may miss this year's order targets as a global economic slump and lower oil prices sharply reduce shipbuilding demand, reports Yonhap. The country's big three  racked up a combined US$26.1 billion worth of orders through November, a little more than half of this year's order target of $47 billion, according to industry sources. By company, Hyundai Heavy clinched orders worth $11.6 billion in the first 11 months of the year.

Korean Shipbuilders in Red

Photo: Samsung Heavy Industries

South Korean shipbuilders are struggling with huge losses stemming from the delivery of low-priced ships and a delay in the construction of offshore facilities such as drill ships. The shipbuilders' earnings are expected to remain in the doldrums until the first half of 2016, although their third-quarter bottom lines may beat estimates after suffering a record loss three months earlier, reports Yonhap. The country's big three shipbuilders - Hyundai Heavy, Daewoo Shipbuilding & Marine Engineering…

Korea Shipbuilders Take Firmer Stance on Business Ethics

SHI shipyard: Image courtesy of the shipbuilder

Korea’s big three shipbuilders are committed to making a fresh start with regard to business ethics in 2014 after getting hit with bribery scandals in 2013, reports the Korea Joong Ang Daily. According to the Korea Joong Ang Daily,  Hyundai Heavy Industries, the nation’s largest ship manufacturer, held an “ethics management resolution” event recently at its headquarters in Ulsan during a management strategy seminar. HHI Chairman Lee Jae-sung and more than 150 high-ranking executives, including CEOs from affiliates, signed a pledge to pursue ethical management.

KDB Starts Sale of Daewoo Shipbuilding

Daewoo Shipbuilding & Marine Engineering, one of 's "big three" takeover targets, has been put up for sale. The other two prime takeover targets are Hyundai Engineering & Construction and Hynix Semiconductor, Chosun reported. The Korea Development Bank said it has begun searching for a manager to sell Daewoo Shipbuilding with an aim to select a preferred bidder by August. After Daewoo Group was dismantled in 1999, the shipbuilding business was managed by creditors. The business graduated from its debt workout program in 2001 and has since been managed by the KDB and the Korea Asset Management Corp., which hold a combined stake 50.4 percent. KDB holds 31.3 percent and KAMCO 19.1 percent.

S. Korea Still Dominates World Shipbuilding

Hyundai Heavy Industries' built Abdelkader, a 177,000 cu. m. Tri-Fuel Diesel Electric LNG Carrier which was named "Great Ship of the Year" in 2010 by Maritime Reporter & Engineering News.

While China has aggressively built its shipbuilding infrastructure in the past 10 years, the most important number, top winner in contract value, still remains the domain of South Korea, which has reportedly logged $37.8b in orders thus far in 2011 vs. China's $10.3 billion, according to a report today on www.businessweek.com. The evolution of the Chinese shipbuilding industry is actually akin to the development of a shipbuilding nation, with a focus on cheap labor and lower-technology, lower-value tonnage.

LNG Carriers, Drillship Orders Increase in Korea Yard

Photo credit Wiki CCL 'lngrivers'

Easing of the Eurozone sovereign debt problems, increased issue of drilling permits in the Gulf of Mexico and growing demand for drillships in Latin America and West Africa have combined to give Samsung Heavy Industries the best order growth visibility among the “Big Three” – Hyundai Heavy Industries and Daewoo Shipbuilding and Marine Engineering. Already, Samsung Heavy Industries has achieved 38 percent of its annual order guidance or $3.8 billion, winning the orders from Inpex’s central processing facilities and two drillships.

GTT Bags Samsung Heavy Order for FSRU

Image: Samsung Heavy Industries (SHI)

GTT, leading engineering company in containment systems for the shipping and storage in cryogenic conditions of LNG (liquefied natural gas) announces a new order from South Korean shipyard Samsung Heavy Industries (SHI) regarding a Floating Storage and Regasification Unit (FSRU). GTT will design the LNG integrated tanks. Its delivery is scheduled in late 2020. This contract is the sixth FSRU order obtained by GTT this year. GTT has already managed the new build of over 40 LNGC and FSRU.

Japan Shippers Merger Ambitious?

Photo: Mitsui O.S.K. Lines (MOL)

The problem in the proposed merger of Japan's three biggest shipping companies (Nippon Yusen, Mitsui O.S.K. Lines and Kawasaki Kisen Kaisha) is, that synergy number looks ambitious - and if it falls short, the players haven't really improved their position much, says Bloomberg. A business is rarely more than the sum of its parts. That's a problem for anyone hoping that combining Japan's big three container-shipping lines will produce a stronger company and the world's sixth-biggest line. The joint venture would see savings of more than $1bln a year.

Taiwan Shipping in Troubled Water?

Pic: EverGreen

Taiwan's shipping lines aren't looking quite so young and fresh as they were earlier, reports Bloomberg. While the global container industry has embarked on a spree of pairings and menages-a-trois over the past 12 months, Taiwan's shipping lines have remained proudly single. Taiwan's major three -  Evergreen Marine Corp., Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. - have kept aloof from the fray. Taiwan has offered its main container shipping lines a relief package to keep them afloat amid worst-ever trading conditions.

FSC Denies Mergers Between Big Three Shipbuilders

Image: Daewoo Shipbuilding & Marine Engineering Co

The chairman of South Korea's Financial Services Commission, Yim Jong-Yong, reiterated  that Daewoo Shipbuilding and Marine Engineering (DSME) would not be merged with Samsung Heavy Industries (SHI) and Hyundai Heavy Industries (HHI), according to a report in Korea Times. The Big Three companies are all under restructuring and a potential 'big deal' will harm all of them, said Yim. A precondition for a big deal is all of those companies undergo restructuring thoroughly and stand on their own. However, they are not in such a condition, he added.

Daewoo Shipbuilding unlocks $2.6 bln Bailout

File Image (CREDIT: AdobeStock / (c) Carabay)

Bondholders at final meetings agree to debt-to-equity swap; shipbuilder needs about $400 mln in operating funds by April-end. South Korea's Daewoo Shipbuilding & Marine Engineering Co Ltd has won near unanimous agreement from bondholders to swap their debt for equity, meeting a condition that unlocks a $2.6 billion bank bailout for the world's biggest shipbuilder. Daewoo won approval from over 96 percent of bondholders at two meetings on Tuesday and three on Monday, with attendance exceeding 78 percent.

Korea's Top 3 Shipbuilders' Shaky Performance

File Photo: Samsung Heavy Industries

The value of contracts signed by Korea's big-three shipbuilders— Hyundai Heavy Industries, Daewoo Shipbuilding and Marine Engineering, and Samsung Heavy Industries — fell far behind the amount they projected for this year, reports The Korea Herald. Meanwhile, Arirang reported that the third quarter earnings of Korea's top 3 are likely to be in the black. Samsung Heavy Industries did not sell a single vessel during the first eight months of this year. Its yearly outcome, however, may differ as the company is currently negotiating a deal worth as much as $2.7 billion.

Chinese Shipyard in Fifth Place for First Time

Image: Shanghai Waigaoqiao Shipbuilding

According to UK-based Clarkson Research Services, Shanghai Waigaoqiao Shipbuilding (SWS) had an order backlog in November of just over three million compensated gross tons  (CGTs), an indicator of the level of shipbuilding ouput. That puts the Chinese  shipbuilder in fifth place by order backlog in November, posing a threat to South Korean shipyards which had been dominating the top five list for years. SWS had an order backlog of 3.03 million CGTs as of end-November, beating South Korea's Hyundai Mipo Dockyard Co. that held 2.84 million CGTs, says a report in Yonhap.

Japan's Big 3 Shipping Lines Eyes Profits

Photo: Kawasaki Kisen Kaisha

Japan's top three  shippers -Nippon Yusen KK (NYK), Mitsui OSK Lines and Kawasaki Kisen Kaisha - appear on course for net profit in fiscal 2017, buoyed by better market conditions and restructuring efforts, Reuters reported. The brighter outlook comes amid a gradual recovery in prices for shipping containers, which carry 90 percent of the world’s manufactured goods. Mitsui O.S.K. Lines likely will achieve a net profit of about 10 billion yen ($90 million) in the current year, up from an expectation of breaking even for the year ended in March, according to Nikkei.

Capesize Rates Post Biggest Weekly Drop in 2 Years

File photo: © HHM / Dietmar Hasenpusch

The Baltic Exchange's main sea freight index fell on Friday and continued to linger around five month lows as the capesize segment recorded its biggest weekly percentage decline in two years. The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels that ferry dry bulk commodities, shed 14 points, or 1.23 percent, to 1,125 points, the lowest since Aug. 10, 2017. For the week, the index ended 12 percent lower. The capesize index fell 118 points, or 7.32 percent, to 1,493 points, its lowest since Aug.

Maritime Reporter Magazine Cover Dec 2017 - The Great Ships of 2017

Maritime Reporter and Engineering News’ first edition was published in New York City in 1883 and became our flagship publication in 1939. It is the world’s largest audited circulation magazine serving the global maritime industry, delivering more insightful editorial and news to more industry decision makers than any other source.

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