Shipbuilder’s profits quadruple in Q2

Samsung Heavy Industries Co., the world’s second-largest shipyard, reported record profits and Daewoo Shipbuilding & Marine Engineering Co., the third-biggest, set an all-time high for orders on booming demand for vessels.
Samsung Heavy said yesterday that net income in the April to June quarter more than quadrupled on contracts for oil and gas tankers. Daewoo Shipbuilding said contracts this month have reached $4 billion, an industry record. Both companies are based in Seoul.
Shipyards in Korea, the world’s biggest shipbuilding country, will probably report all-time high earnings this year as they book contracts at record prices. A.P. Moeller-Maersk A/S, the world’s largest shipping line, and its peers have spent more on vessels for about five years to move more raw materials to China and take finished goods to the U.S. and Europe.
“Earnings are looking good for shipyards and ship prices will probably remain at record levels,” said Mo Jae-sung at Hanwha Investment Trust Management Co.
Shares of Daewoo Shipbuilding climbed as much as 3.3 percent to 61,900 won yesterday in Seoul. Shares of Samsung Heavy rose as much as 2.4 percent to 52,100 won.
The two companies raised their targets for new contracts in 2007 by as much as 55 percent earlier this month because of the strong demand for vessels that can carry containers, coal and other products.
Ship prices, rising since 2003, have gained as much as 26 percent this year as economic expansion in China increases demand for coal, oil and other goods, leading to the need for more new ships to transport them. That’s helping Korean yards to book record orders for a fifth consecutive year.
A shipbuilding price index that tracks the value of all types and sizes of vessels rose to 172.6 in June from 171.9 a month earlier, according to London-based Clarkson Plc, the world’s largest shipbroker.
The price of a very large crude carrier, the biggest of its type, rose about 80 percent to a record $137.50 million at the end of June this year from the end of 2003. The price of a vessel that can carry 147,000 cubic meters of liquefied natural gas has climbed by more than a third to $225 million, according to Clarkson. Bloomberg