Samsung Heavy Industries' operating profits increased 115% last year, exceeding target (South Korea)

Samsung Heavy Industries announced on the 5th that its operating profit last year reached 502.7 billion won (about 53.1 billion yen), up 115% from the previous year. Sales for the same period also increased by 23.6%.
The company explained that this result was due to an order strategy that maximized profitability. An insider said, "The increase in sales has led to a reduction in fixed costs, and the ship prices have improved.
However, pre-tax profit, which is net profit before corporation tax is deducted, fell into the red at 315.5 billion won.
The company had signed a contract with Russia's Zvezda Shipyard, but construction was halted due to the effects of the Russia-Ukraine war.
In relation to this, the company has decided to apply "fair value risk hedge accounting" to the futures contracts of the Russian project.
However, after considering the impact of the accounting treatment following the unilateral contract cancellation notice from the client, we discontinued the application of risk hedge accounting and reflected the impairment loss on the related futures contracts."
The explanation was that the accounting method was changed following the cancellation of the Russian project, resulting in the loss.
"Since there is no explicit provision on the reason for this, we have received opinions from the Korea Accounting Standards Board and experts and have reflected the results of our review," the company said. The company's performance will continue to improve this year as it follows its selective order strategy.
This year, construction of floating liquefied natural gas (FLNG) facilities will also begin in earnest. Reflecting these circumstances, the company has set its performance guidance for this year at 10.5 trillion won in sales and 1.5 trillion won in operating profit.
The company proposed a profit of 630 billion won.