STX Steams Up in Offshore Market
By Kim Yoo-chul
Staff Reporter
STX Shipbuilding, currently the world's No. 5 shipyard, is a latecomer in the global shipping industry. But it wants to compete with its bigger rivals such as Hyundai Heavy Industries and Samsung Heavy with active overseas operations and an aggressive acquisitions drive abroad.
STX said Tuesday that the Oslo Stock Exchange had approved its offer for a 59.6 percent stake in Aker Yards ― the world's biggest cruise ship manufacturer, based in Norway ― and the 40.39 percent-held by STX Norway.
The offer was triggered in June when STX Norway raised its stake in the ship maker to above 40 percent from 39.2 percent at 63 kroner per share. Shareholders representing 59.6 percent equity in Aker can choose to sell their stock between July 18 and Aug. 15, according to STX spokesman Lee Kwang-ho.
In October last year, STX bought a controlling interest in Aker for $800 million in a surprise move into the promising cruise sector of shipbuilding.
The largest overseas acquisition ever by a South Korean shipbuilder will enable STX to begin building cruise liners, which are more profitable than mid-sized containers and chemicals carriers.
Orders for cruise liners reach over $13 billion annually, accounting for more than 12 percent of the global shipbuilding market, according to industry estimates.
Inspired by the successful purchase, STX Group chairman Kang Duk-soo ambitiously raised this year's sales target to 25 trillion won.
Also, in order to prop up the realization of the revised target, the group is expanding its business units to four sectors ― shipbuilding and machinery, shipping and trade, plant construction, and energy ― from the current three in a measure to challenge global markets.
``We are ready to reap 7.1 trillion won in sales from the shipbuilding and machinery sectors, including performances from the Dalian Marine Equipment Park, which will be in operation from this year,'' Kang added.
The group's shipping line, STX Pan Ocean, is another back-up factor to help the shipbuilder move more, considering its strong Baltic Dry Index (BDI) figures ― a global barometer of shipping costs for dry bulk goods.
``With Asia being a major consumer of commodity products, the BDI has also risen in line with commodity prices,'' said a local analyst.
Experts say the current market jitters over a sudden slump in Chinese demand for iron ore led to a steep fall in the BDI of more than 12 percent in just two days in mid-June. But, the building boom ahead of the summer Olympics had seen massive imports of iron ore, they added.
``Risks lie ahead after the Olympics as Chinese authorities are considering cutting demand for iron ore and cement shipments, however, in general, the outlook is positive considering rising materials costs,'' the analyst added.
STX Group plans to achieve 2.2 trillion won in ordinary income and $20 billion in exports.
The stock price of its shipbuilding arm has more than tripled so far this year from January 2005. On July 22, STX Shipbuilding ended at 52,000 won per share on South Korea's main stock market from 16,000 won in 2005.
STX is an industrial holding company focusing on shipbuilding, energy and trade. Its main shareholdings include STX Shipbuilding, STX Pan Ocean, STX Engine, STX Heavy Industries, STX Energy and STX Construction.