SHI reports 854 billion won operating loss in 2022

A floating production and storage offloading (FPSO) platform built by Samsung Heavy Industries [SAMSUNG HEAVY INDUSTRIES]

Samsung Heavy Industries (SHI) reported an operating loss of over 800 billion won ($651.2 million) for 2022, in preliminary earnings released Monday.

The company blamed increased fixed costs despite last year's surge in orders. It has been in the red for seven years in a row.

SHI said in a regulatory filing that it posted an operating loss of 854.4 billion for the year. Sales fell 10.2 percent to 5.9 trillion won.

The shipbuilder estimates this year’s operating profit to be 200 billion won.

Amid a slowdown in steel prices, the massive deficit was due to the rise of fixed costs from increased outsourcing and labor costs, the company explained.

It says orders signed since 2021, lower fixed costs and higher sales will start to kick in. The increasing orders for high-value added vessels, including liquefied natural gas (LNG) carriers, are expected to contribute to improving profitability, it added.

SHI beat its target for two consecutive years by winning orders of $12.2 billion in 2021 and $9.4 billion in 2022. During the two years, it received $12.2 billion of orders for 58 LNG carriers.

The company set its annual sales goal at 8 trillion won for this year, up 34.5 percent from last year, while the order target was set one percent higher than last year to $9.5 billion.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]