S Korean shipbuilders pessimistic about 2015

 

 

 

 

08 January 2015
 
South Korean shipbuilders may only strive to maintain current order backlogs in 2015, said an analyst in a research note. Photo: PA

Instead of aggressive order-taking, South Korean shipbuilders may only strive to maintain current order backlogs in 2015, said an analyst in a research note.

Youngsoo Han of Samsung Securities said, "After reviewing New Year messages from CEOs of Korea's big three shipbuilders - Hyundai Heavy Industries (HHI), Samsung Heavy Industries (SHI), and Daewoo Shipbuilding & Marine Engineering (DSME), it has become clear that all of them have more conservative industry outlooks than they did in 2014."

Han continued, "Jaeho Ko, CEO of DSME, and Ohgap Kwon, CEO of HHI, both worry about oil price declines and the sluggish global economy. They also stressed the possibility of greater competition with players in China and Japan. There has been no mention of foreign competitors in their 2014 messages. Daeyoung Park, CEO of SHI used a meaningful word: 'survival', in his message, hinting a conservative view of the industry outlook."

In the case of DSME, the shipbuilder changed its ambition into a more realistic one, although it was the most successful among the big three in 2014.

Han explained, "Last year, DSME's CEO Ko said the shipbuilder would strive to transform into the world's top shipbuilding and offshore EPC [engineering, procurement, and construction] player, but this year's message focused on strengthening presence as a dominant commercial vessel player, a leading offshore firm, and an emerging defence market contender."

The analyst concluded, "Their pessimistic messages were disappointing. With most shipbuilders seeing order backlogs contract, the industry could suffer from downward sales and earnings forecast revisions."