DSME declares a 'state of emergency' as business deteriorates

Daewoo Shipbuilding & Marine Engineering

Daewoo Shipbuilding & Marine Engineering (DSME) declared a state of emergency in the face of rising debts and deteriorating business conditions at home and abroad.

The company said in a statement on Wednesday that its debt ratio increased to 547 percent by the end of the first quarter because of a number of issues, including the cancellation of ship orders due to the Russia-Ukraine war, raw material price increases and recent strikes by subcontractors.

The headwinds necessitated going into emergency mode, CEO Park Doo-sun said, encouraging all employees to participate. When asked about the specifics of how employees will participate, a spokesperson for DSME said that there were no measures concerning longer working hours or a reduction in pay, but commented that "employees are encouraged to acknowledge the situation that the company is in and work towards improvement."

Although DSME has recently obtained big orders and seemed to be reviving, it recorded massive losses last year and in the first quarter of this year.

To tackle this situation, DSME is preparing a strategy based on consulting from external professional organizations.

“The recent recovery in orders has helped to solve the problem of low production volume and to normalize business, but the prolonged illegal strike of subcontractors is shaking expectations,” Park said in a statement Wednesday. “All executives, including the president, will operate on a 24-hour emergency system to take the lead in resolving the current crisis as soon as possible and create a company that can continue to grow.”

DSME's stock fell 9.46 percent in trading Wednesday.

BY LIM JEONG-WON [lim.jeongwon@joongang.co.kr]