By Jhoo Dong-chan
The county’s three ailing shipbuilders are expected to liquidate their wind power business abroad amid the ongoing restructuring process after being hit hard by multitrillion won losses due to the global economic downturn.
According to industry sources, Thursday, the three shipbuilders ― Daewoo Shipbuilding & Marine Engineering (DSME), Hyundai Heavy Industries (HHI) and Samsung Heavy Industries (SHI) ― are selling their overseas wind power facilities after suffering operating losses of tens of billions of won because of a decline in demand and failing oil prices.
HHI, the world’s largest shipbuilder, has recently finalized the liquidation procedures of JaKe Serivce GmbH, its German-based wind turbine gearbox-producing subsidiary, which suffered operating losses of 41.1 billion won ($37.4 million) in 2011 and 35.1 billion won in the following year. The company’s debt overtook its assets in 2012.
DSME is also carrying out the liquidation process on its U.S.-based wind power affiliate DeWind as part of its restructuring plan. Operating four wind farms, including ones in Oklahoma and Texas, the company posted a 71.8 billion won net loss last year.
DSME’s other wind power manufacturing affiliate DSME Trenton, or DSTN, went into receivership in Canada, March. Its Canadian holding company posted losses of 24.3 billion won last year due to poor performance. Its debt also overtook the company’s assets last year.
SHI has already settled the liquidation processes of its wind power businesses overseas. It sold its wind power R&D center in Hamburg, Germany, to French-owned wind turbine company Alstom Wind in September 2014.
Last November, SHI also sold the company’s next generation 7MW demonstration offshore wind turbine in Scotland to British ORE Catapult.
“The three major shipbuilders were second movers in the wind power industry, suffering a multitrillion won loss due to the global downturn and failing oil prices,” said an industry official.
“They have decided to liquidate their wind power businesses as a part of restructuring plans.”
According to the financial statements of the three shipbuilders, DSME had a debt ratio of 4,266 percent last year.
SHI's debt ratio was 306 percent with a total outstanding debt of 13.3 trillion won by last year, while HHI also suffered a debt ratio of 221 percent with a 34.2 trillion won debt.
Following restructuring through assets liquidation, the three shipbuilders’ net income turned to profit in the first quarter of this year.
HHI and SHI, which suffered net losses over 1 trillion won last year, both turned a profit in the first quarter this year ― 244.5 billion and 15.9 billion won in net profits, respectively.
DSME also suffered a net loss of 3.3 trillion won last year but turned to profit with a net income of 31.4 billion won while it marked an operating loss of 26.3 billion won in the same period.