Samsung Heavy reports 506.8 billion won quarterly loss amid shipbuilding boom

Samsung Heavy Industries continues to reel under troubled finances and weak recovery scenarios reporting an operating loss of 506.8 billion won in its quarterly earnings for the January-March period.

Some of the losses were attributed by market observers to its heavy reliance on the once-promising offshore plant business and pandemic-induced cancellations that resulted in excess drillship inventory.

This year, Samsung Heavy also lost out in several landmark orders to Korea Shipbuilding & Offshore Engineering and Daewoo Shipbuilding & Marine Engineering.

Among the deals was a $758 million order from Brazil’s state-owned Petrobras to construct a floating crude oil production, loading, and storage facility.

To turn things around, Samsung Heavy plans to achieve a capital reduction by cutting the face value of its shares by 80 percent from 5,000 won to 1,000 won. The company also seeks to raise 1 trillion won by selling new shares.

The company’s stock price dipped from a peak of 7,780 won to 5,620 won, though it later recovered to the 6,000 won range in late May.

Last week, KB Securities lowered the target stock price for Samsung Heavy from 6,500 won to 5,000 won as the shipbuilder prolonged deficit orders throughout the quarter.

South Korea’s main shipbuilders are experiencing robust business brought by global trade recovery and increasing demand for advanced eco-friendly vessels. Market leader Hyundai Heavy's stock hit a high for the year of 79,300 won in the second quarter.

Meanwhile, Samsung Heavy had won an order worth 417 billion won to construct two liquefied natural gas carriers for a shipper in the Oceania region, aiming for delivery by July 2024.

According to officials, the upcoming models will be noted for several eco-friendly technologies, such as the air lubrication system Saver Air.

The company has so far achieved $5.4 billion in orders this year, comprising 59 percent of its order target total for the year.