Daewoo Shipbuilding & Marine Engineering Co. (DSME) is planning to sell its ailing subsidiaries. As a measure to focus on its major businesses, the DSME is also considering to dispose of non-core assets, including a golf course.
According to shipbuilding industry sources, DSME is giving positive consideration to selling its six subsidiaries suffering from poor performance. These six affiliates are Daewoo Mangalia Heavy Industries (DMHI), Daewoo Shandong Shipbuilding Co. (DSSC), Dewind, DSME Trenton, DSME Construction (DSC), and FLC. Due to performance deterioration, all of these are subsidiaries of the DSME, which has operating profits at almost zero.
The measure has come up in the process of newly-appointed CEO Chung Sung-leep being debriefed of its business reports before his inauguration.
However, some in the shipbuilding industry expressed doubts about whether it is possible to sell these within his term.
This is because the Romanian and Chinese governments hold a 49 percent share in DMHI and DSSC, respectively. Also, anyone is less likely to purchase ailing subsidiaries in a situation that the sale of even normal businesses is being postponed.
An official from the industry said, “As the DSME recorded a deficit in the first quarter, it is likely to face performance deterioration. Therefore, restructuring is needed. However, there is a doubt that CEO Chung could make a result within his term, as he only focuses on restructuring, including disposal, even before his inauguration.”