Destiny of DSME
McKinsey said on October 12 that Daewoo Shipbuilding & Marine Engineering’s operating profit-to-sales ratio can further drop to negative 10 percent and the company will become incapable of being self-sufficient as the case may be.
According to its recent business consulting report, the operating profit-to-sales ratio is likely to drop from negative 5% to negative 10% between the period of 2011 to 2015 and 2020 and then the company will run out of cash. It added that the company will be short of 3.3 trillion won in 2020.
In response, Daewoo Shipbuilding & Marine Engineering said that the report is based on groundless assumptions and does not reflect its self-help efforts and direction of restructuring to reduce the ratio of maritime business.
The Ministry of Trade, Industry & Energy of South Korea refuted the report as well. “Giving up on competitive businesses in the shipbuilding industry based on the simple reason of global demand shrinkage means handing them over to rival countries such as China,” it mentioned. According to the ministry, the current crisis in the industry is attributable to conditions that deteriorated as a result of the recent dumping war in the offshore plant sector among South Korean companies themselves and they can take the lead again once they succeed in tiding over this crisis.
In this context, the ministry is planning to include various financial support measures in its industry restructuring plan to be released late this month, which are to be provided in return for layoff and asset disposal.