Shipbuilding Giants Samsung Heavy, Hanwha Ocean Struggle to Meet Annual Targets Despite Favorable Market Conditions

Samsung Heavy Industries and Hanwha Ocean have encountered difficulties meeting their shipbuilding order targets for this year.

According to industry officials, this happened despite the advantageous market conditions, as per the Korea Times.

Slow Progress and Challenging Negotiations

Samsung Heavy reported that an Oceanian shipowner's order to construct two huge ammonia carriers (VLACs) worth approximately $240 million allowed them to achieve 72% of their goal of securing $9.5 billion in orders this year.

However, Hanwha Ocean only reached 57% of its target, as they recently signed a significant contract worth 1 trillion won ($776 million) with the Defense Acquisition Program Administration for a submarine construction project.

Both companies are not expected to achieve their annual goals due to the sluggish progress in negotiations with QatarEnergy regarding constructing additional liquefied natural gas (LNG) carriers for the Middle Eastern nation. Even if they manage to secure orders for 10 LNG carriers from QatarEnergy, it will not suffice to meet their targets since an LNG carrier typically costs around $265 million.

Business Korea reported that the declining global demand for vessels presents an even greater obstacle for these shipbuilders. Despite their projected earnings growth this year, there is a gloomy outlook for winning orders next year.

Experts predict a 16% decrease, with the size of shipbuilding orders in Korea expected to reach $28 billion by 2024, as stated by Yang Jong-seo, a researcher at the Overseas Economic Research Institute of the Export-Import Bank of Korea.

Outlook and Strategies Moving Forward

In light of the uncertain future, a Samsung Heavy official affirmed the company's commitment to securing lucrative orders in the coming year and reassured their position, citing previous successful ventures. Likewise, a Hanwha Ocean official confidently mentioned that they are not in a rush to achieve their annual target, as they have already clinched a significant number of orders in recent times.

In contrast to Samsung Heavy Industries and Hanwha Ocean, HD Korea Shipbuilding & Offshore Engineering has achieved its objective of securing $15.7 billion in orders this year. Their success came through signing a contract with QatarEnergy in October, marking the construction of 17 LNG carriers valued at $3.9 billion.

Photo: Hanwha Newsroom