DSME finances sink to net loss

Daewoo Shipbuilding & Marine Engineering (DSME)’s finances swung to a net loss last year, as a drop in the number and price of new contracts sent its operating profit down more than 70 percent from a year earlier.

DSME is the world’s third-largest shipbuilder by order value. Its sales for 2019 fell 13.3 percent on-year to 8.4 trillion won ($7.04 billion), while operating profit dropped 71.4 percent to 29.28 billion won, the company announced in a statement Tuesday.

The shipbuilder shifted to a net loss of 46.5 billion won from a net profit of 320 billion won in 2018.

The company blamed low-priced deals and a general decline in new shipbuilding orders for its dismal profitability last year. DSME said the decline in demand for ships has been falling across the industry.

The company paid off some of its debt to shrink its debt ratio from 210 percent in late 2018 to 200 percent by the end of last year.

The Korean shipbuilder added that the company had to report a net loss as it has been allocating additional funds to provide compensation for damages to shareholders that have filed complaints against DSME. The company was found guilty of fraudulent accounting for 8 years until 2016, and DSME said it is preparing to provision for future liabilities.

For 2020, the company says it plans to achieve $7.21 billion worth of orders, but continuing uncertainties in the shipbuilding market could hinder growth at DSME, along with other Korean shipbuilders.

DSME said general global economic difficulties have increased, which will negatively influence the demand for ships. But the shipbuilder said it will work to attract various types of orders while working to improve its balance sheets by cutting costs.

BY KO JUN-TAE [ko.juntae@joongang.co.kr]