Shipbuilders’ losses expected to hit 7.4 trillion won

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Shipbuilders’ losses expected to hit 7.4 trillion won

The nation’s top three shipbuilders are expected to report about 7.4 trillion won ($6.5 billion) in losses this year, mainly due to a slump in the industry and struggles with offshore plant businesses, according to industry data on Sunday. The big three - Hyundai Heavy Industries (HHI), Samsung Heavy Industries and Daewoo Shipbuilding and Marine Engineering (DSME) - have already reported 4.7 trillion won in operating losses in the first half, but an additional 3 trillion won is expected through the end of the year.

The losses are raising concerns that Korea could give up its status as the world’s top shipbuilder to China.

The annual operating losses will be the largest on record in the industry, and will also mark the first time all three shipbuilders have gone into the red at the same time.

DSME has already reported more than 3 trillion won in operating losses in the second quarter, and is forecasted to lose 5.3 trillion won by the end of the year. Analysts predict that DSME will stay in the red next year as well.

Samsung is predicted to report 1.5 trillion won in losses, and HHI is anticipated to announce 600 billion won in losses.

“The total losses will be so huge that the three might not be able to pay them off in the next 10 years,” said a spokesman of a local shipbuilding company.

Samsung said earlier this year that its estimated losses for 2015 will be 1.37 trillion won, but the industry data says that figure could increase to the 1.5 trillion won level. The company has been carrying out a series of restructuring plans, including the sale of its office building in Suwon. HHI, which reported 3.25 trillion won in losses last year, has already lost 471.9 billion won in the first half, and is expected to record about 250 billion won in additional losses in the second half. It will be the first time the nation’s leading shipbuilder has stayed in the red for two consecutive years.

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