Performance in Recession
According to industry sources, Hyundai Heavy Industries is estimated to have posted 9.6461 trillion won in sales – down 12 percent from a year ago – and 344.8 billion won in operating profit in the third quarter of this year. The estimated figures are 2.4499 trillion won (up 0.5 percent) and 58.1 billion won for Samsung Heavy Industries. Daewoo Shipbuilding & Marine Engineering, which recorded an operating loss of 449.9 billion won in the first half of this year, is likely to have reached 36 billion won in operating profit in the third quarter. Each of the three companies is estimated to have achieved a profit turnaround in that quarter.
These improvements can be attributed to manpower reduction and asset disposal. Hyundai Heavy Industries and Samsung Heavy Industries spent no less than 260 billion won and 210 billion won for those told to quit their jobs in the second quarter, respectively. In Daewoo Shipbuilding & Marine Engineering, a voluntary retirement program is currently underway targeting 1,000 employees.
Their sales are showing no signs of improvement in the middle of the ongoing recession in the industry. Hyundai Heavy Industries’ quarterly sales dipped below 10 trillion won and added up to 9.8627 trillion won in the second quarter of this year. Things are not rosy for the other two, either.
The recession in the industry is likely to continue for a while, and these companies have to withstand it with their contracts signed in 2014 and last year, given that shipbuilding takes a couple of years in most cases. This means that their profitability hinges on the intensity of their restructuring programs and cost reduction efforts. Up to this moment, Hyundai Heavy Industries has achieved only 14 percent of its goal for this year. The rate stands at 16 percent for Samsung Heavy Industries and 8 percent for Daewoo Shipbuilding & Marine Engineering.