DSME could be split up and a division sold off, though KDB denies

Workers oversee Daewoo Shipbuilding & Marine Engineering's shipyard in Geoje, South Gyeongsang, on Monday. [YONHAP]

Daewoo Shipbuilding & Marine Engineering (DSME) assets may be sold off if efforts to sell the whole company are unsuccessful, according to local press reports.

The shipbuilder has been losing money for years and has been pushed further into the red by a recent strike. Government-owned Korea Development Bank (KDB), the majority shareholder, is looking at options.

According to domestic media reports on Monday, DSME could be separated into two units — one for military business and the other for civilian business — and one or both could be sold.

"No plan for a split-off or spin-off has been discussed," KDB said in a statement.

KDB has engaged an external management consultant since the end of last year, and the results of the work were to be disclosed in March. But conditions changed due to war in Ukraine and a recent strike of DSME subcontractors.

"The rise in heavy plate prices due to the Ukraine crisis and other conditions in the shipbuilding industry have changed a lot from the time of consulting at the end of last year," said an official from KDB. "In the first half of this year, we were in the process of reflecting these new aspects, but the strike broke out and the consulting process was further delayed."

DSME subcontractors ended a 51-day strike on Friday.

"Realistically, it is impossible to consider a split-off or spin-off without the results of the consulting," the official continued. "Once the results come out, we will discuss various ways of selling the company based on the results."

Kweon Seong-dong, floor leader and acting head of the People Power Party, called for the resignation of DSME CEO Park Doo-sun Monday. Kweon claims there was a problem with then-president Moon Jae-in's appointment of Park as CEO back in March.

"The management of DSME, including the CEO, should take responsibility for the lackluster operations of the company and step down," said Kweon during a meeting of the supreme council held at the National Assembly in Yeouido, western Seoul, Monday. "A new management should come up with self-rescue measures, such as enhancing competitiveness and an innovative management structure."

"If the Korean Confederation of Trade Unions tries to interfere again with the normalization of DSME, it will be severely punished according to the law," Kweon said.

"The immediate situation has been resolved, but there is still work to be done." continued Kweon. "It was a bottomless pit caused by the moral hazard of labor and management."

The company has booked a cumulative loss of over 70 trillion won ($53.5 billion) and has received 11 trillion won in tax support.

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