iMarine

South Korea’s three largest shipbuilders are expected to achieve annual profits in 2024

The shipbuilding market is booming, and South Korea’s three largest shipbuilders are expected to achieve annual profits for the first time at the same time. This is due to the strong performance of orders for liquefied natural gas (LNG) carriers, with South Korea accounting for about 70 percent of the global market.

Three shipbuilders, HD Korea Shipbuilding & Offshore Engineering (HD KSOE), the intermediate holding company for HD Hyundai Group’s shipbuilding business, Samsung Heavy Industries, and Hanwha Ocean, recently announced their third-quarter 2024 results.

HD KSOE announced on Oct. 31 that third-quarter operating profit amounted to 398.4 billion won, up 477% year-on-year. Samsung Heavy Industries announced on Oct. 24 that its third-quarter operating profit was 119.9 billion won, up about 15 percent year-on-year.

Hanwha Ocean reported a third-quarter operating profit of 25.6 billion won, the smallest among the three major shipbuilders, but it has turned a profit from the previous quarter. Hanwha Ocean said profits increased thanks to the increase in the sales ratio of LNG carriers and the integration of factory departments.

The main reason for the profitability of the three major shipbuilders was the growth in orders for LNG carriers.

It is understood that South Korean shipbuilders have executed an order strategy centered on high-value-added ships, taking up a majority share of the global LNG carrier market. In the first quarter of this year, Korean shipbuilders received 100% of the global orders for LNG carriers and ammonia carriers. So far this year, Korean shipbuilders have taken 70% of the global orders for LNG carriers.

The reason why South Korean shipbuilders were able to turn a profit at the same time in the third quarter is that they received the world’s largest number of orders for LNG carriers. In the booming shipbuilding market, the three major shipbuilding companies will be profitable for the first time this year, and the last time they were profitable at the same time was 13 years ago.

South Korean industry insiders say that shipyards have a full workload for the next three years, considering current hand-held orders. It is said that the hand-held orders of the three major South Korean shipbuilders may exceed 200 trillion won this year.

Up to now, South Korea’s three major shipbuilders, in addition to Samsung Heavy Industries, have exceeded the annual order target.

HD KSOE has received orders for 169 new vessels worth $18.84 billion this year, far exceeding its annual order target of $13.5 billion. It includes eight LNG carriers, three LNG bunkering vessels, 62 product tankers, 48 LPG/ammonia carriers, 22 container ships, three ethane carriers, two liquid carbon dioxide (LCO₂) carriers, six VLCCs, seven oil tankers, two PCTCs, one FSRU, one offshore vessel, and four specialty vessels.

Hanwha Ocean has received orders for 37 new vessels worth about $7.35 billion, more than double the total annual order book for 2023 ($3.52 billion).By vessel type, the order includes 16 LNG carriers, seven very large crude carriers (VLCCs), six container ships, two very large liquid ammonia carriers (VLACs), one very large natural gas carrier (VLGC), one FSRU, one offshore vessel, and three specialty vessels.

So far, Samsung Heavy Industries has received orders for 29 vessels (about $6 billion), achieving 62% of this year’s $9.7 billion target, including 22 LNG carriers, 2 VLACs, 1 shuttle tanker and 4 Suezmax tankers.

Although the annual order target was not met ahead of schedule, Samsung Heavy Industries said that it is negotiating new projects such as FLNG and LNG carriers, and it will not be a problem to meet the annual target. It is understood that Samsung Heavy Industries’ Mozambique Coral FLNG project is progressing smoothly and is expected to place an order in the fourth quarter of this year. The contract value will reach $2.5 billion.

Since the global financial crisis in 2008, the shipbuilding industry has experienced more than a decade of decline. If the three major Korean shipbuilders achieve annual profits at the same time, it will be the first time since 2011. The market generally believes that the shipbuilding industry has entered a new round of super cycle.

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