Korean media reported that the three largest shipbuilding companies in South Korea (HD Korea Shipbuilding & Offshore Engineering (HD KSOE), Samsung Heavy Industries, Hanwha Ocean) have recently asked for understanding from the media, industry professionals and related organizations and universities that have requested to visit their shipyards. Also, for safety reasons, visitors are at high risk of accidents, even when wearing protective equipment.
Shipbuilders explained: “Visitors need the cooperation of on-site workers to protect their safety, but the on-site workers are currently busy with various types of shipbuilding work. It is important to keep the promise to the shipowner that the shipbuilding progress will not be delayed due to lack of manpower. Therefore, the shipyard declines visits from all types of people so that the workers can focus on their work.”
In fact, the average utilization rate, which is an indirect indicator of shipyard operations, has improved significantly. In the case of Hanwha Ocean Geoje Shipyard, for example, the annual average utilization rate exceeded 100 percent until 2020, fell to 98.8 percent in 2021 and 94.6 percent in 2022 and 97.1 percent by the end of 2023. Over the same period, Samsung Heavy Industries’ Geoje Shipyard’s annual average utilization rate dropped from 97.2% to 86.3% before recovering to 97.4%. It is estimated that the average utilization rate of both shipbuilders has exceeded 100 per cent in the first quarter of this year.
The average utilization rate of shipyards improved means that South Korea’s shipbuilding industry, such as rapid construction and delivery advantages are gradually restored, thus driving the growth of South Korea’s ship exports.
Accroding to South Korea’s Ministry of Trade, Industry and Energy (MOTIE) statistics, as of March, South Korea’s monthly ship exports for eight consecutive months in an upward trend, January to March this year’s exports amounted to 6.63 billion U.S. dollars, compared with the same period last year, an increase of 64.3%, in South Korea’s 15 major export items in the highest rate of increase.
As most of the orders of the three major shipbuildings come from overseas, the increase in exports means that the performance of the shipbuilding companies will also improve significantly.
HD KSOE is expected to realize an operating income of 5.6392 trillion won and an operating profit of 159.9 billion won, according to the first-quarter earnings forecast of listed companies by FNGuide, a South Korean financial information service.
Among them, HD Hyundai Heavy Industries is expected to achieve an operating income of KRW 3.1358 trillion and an operating profit of KRW 74 billion, while HD Hyundai Miura is expected to achieve an operating income of KRW 990.3 billion and an operating loss of KRW 17.3 billion. It is speculated that privately held HD Hyundai Samho will exceed expectations.
During the same period, Samsung Heavy Industries is expected to realize an operating income of 2.3198 trillion won and an operating profit of 84 billion won; Hanwha Ocean is expected to achieve an operating income of 2.251 trillion won and an operating profit of 17.9 billion won. This means that all three major shipbuilding companies will realize quarterly operating profit.
The outlook for the next two years is also optimistic, according to the Korean media. According to MOTIE, Trade and Resources, South Korea’s ship orders in the first quarter of this year were valued at $13.6 billion, surpassing China to rank first in the world. This is the first time since the fourth quarter of 2021 that South Korea has topped the world in the quarterly order stage.