South Korea's shipbuilding industry: orders are strong but performance is sluggish...Ship price rise will be delayed

The third quarter results of South Korea's three major shipbuilding companies (HD Korea Shipbuilding & Marine Engineering, Samsung Heavy Industries, and Hanwha Ocean) are expected to fall far short of market expectations.
The shipbuilding industry has entered a super cycle (super boom period) and is achieving steady results in orders, but it appears that improvements in business performance have been delayed as shipbuilding prices have not yet entered a full-fledged upward trend.
It will be done. Some believe that it will be difficult to achieve a surplus by the end of this year. According to financial information company F&Guide on the 8th, the three shipbuilding companies' combined sales for the third quarter were 13.185 trillion yen.
The operating profit is estimated to be 165.2 billion won (approximately 18.3 billion yen). This is a figure that is 2% lower in sales and 63% lower in operating income than the initial market forecast.
equivalent to "shock". The operating profit forecast for the third quarter, previously predicted by a securities firm, was 452.2 billion won. By company, HD Korea Shipbuilding & Marine Engineering's third quarter sales amounted to 5 trillion yen.
It is expected to record 452 billion won and operating profit of 116 billion won. Sales will be in line with market expectations, but operating profit is expected to be less than half of consensus.
Samsung Heavy Industries and Hanwha Ocean's sales from July to September are also expected to be 1.912 trillion won and 1.791 trillion won, respectively, falling below the initial forecast of 2 trillion won.
It will be done. Samsung Heavy Industries is also expected to record an operating profit of 25 billion won for the same period, which is 35 billion won lower than expected. In the case of Hanwha Ocean, which had expected to return to profitability, 2
The company is expected to remain in the red with an operating loss of 9 billion won. Lee Dong-hyun, a research member at Shinhan Investment & Securities, said, ``Although sales are steadily increasing, Samsung Heavy Industries
``Enfa Ocean will incur high costs for restructuring after the acquisition.'' ``HD Korea Shipbuilding & Marine Engineering has also been slow to reflect the increase in ship prices in its profits,'' the analysis said.
The reason behind the delay in improving the performance of the three companies is the slump in ship prices. In the Korean shipbuilding industry, a method called "heavy tail" is used.
Most of the payment is received after the contract is signed and the ship is delivered. Therefore, it may take more than two years for orders received to be reflected in sales. Current performance is based on orders received at historically low prices.
This means that it is influenced by the amount of money. However, recently, the size of deposits has increased, and ship prices are on a recovery trend. If the parts contracted for after 2021 are constructed and delivered, there will be an opportunity to improve sales.
The industry expects the pace of growth to accelerate. In particular, the trend of rising ship prices continues, and it is expected that the momentum for increasing business performance will become clearer as the years go by. Clark, a shipbuilding and shipping market analysis organization
According to Song Research, the new ship price index was 175.38 as of the end of last month, an 8% increase compared to the same period last year. This is 94% of the annual high of 186.7 in 2008.
An industry insider said, ``Rising ship prices will be added to shipbuilding companies' future profits and losses, but current prices are at a level where meaningful improvement in profitability can be expected.''
"We have secured a high level of performance, and the speed of performance improvement will continue to accelerate next year."