Lee Hyo-sik is Finance Desk editor at The Korea Times. He manages finance-related stories on macroeconomics, banks, stocks, bonds, crypto etc. He is passionate about covering what's happening in Korea's financial industry and explaining it to both Korean and non-Korean readers. You can reach him at leehs@koreatimes.co.kr. Your insights and feedbacks are always appreciated.
STX expects business turnaround in 2013
Myanmar President Thein Sein, fifth from right, is briefed about STX Group by Chairman Kang Duk-soo, second from right, at the STX shipyard in Jinhae, South Gyeongsang Province, in October last year. The shipbuilder expects a dramatic recovery this year in the wake of growing demand for new vessels and power plants. / Courtesy of STX Group
By Lee Hyo-sik
By Park Si-soo
STX Group is expected to see a turnaround in 2013 on the back of an economic recovery and improved financial health helped by sales of its core assets.
Last year was painful for the nation’s fourth-largest shipbuilder. It had to sell money-making affiliates to tackle a credit crunch caused by declining demand for new vessels amid the prolonged global economic downturn.
The company has pledged a dramatic recovery this year. The firm is attempting to recapture its past glory by launching aggressive sales campaigns for its core shipbuilding business as well as for new growth engines such as power generation and plant construction.
“The primary goal for this year is increasing the number of orders using our extensive global sales network,” STX said in a statement regarding its business strategy for 2013. “We will also be attentive in taking care of our financial health to lay the groundwork for STX to become a global shipbuilding group.”
Various reports on the shipbuilding industry suggest a slow demand recovery this year. The Institute for International Trade expects Korean shipbuilders will see an increase in exports by 4 percent in 2013.
Despite the downturn last year, STX signed contracts to build 118 vessels worth $9 billion. The ordered ships are being built at the company’s shipyards in Korea, China and Europe. They include several drillships and floating storage offloading vessels that require high-end shipbuilding technology, STX officials said, underscoring the firm’s competitive edge in making high-value vessels.
The company’s European unit clinched a deal to build a luxury cruise ship in December. Under the deal with Royal Caribbean Cruises, the world’s second-largest cruise operator, STX France will build the vessel capable of accommodating nearly 8,500 people by mid-2016. It built and delivered two same-sized liners for Royal Caribbean in 2009 and 2010, each priced at 900 million euros or $1.2 billion.
The company expects to hit the jackpot this year in the power plant construction business. It has tried in recent years to develop essential technologies for that area. STX has won several contracts to build power plants in the Middle East. The latest deal, worth $150 billion, was signed in December, under which the group’s heavy industries unit will construct a power plant with four gas turbines in the Iraqi city of Amara. The turbines will combine for a generation capacity of 500 megawatts and will be completed by June 2014. The contract mandates STX to take full responsibility for the operation and maintenance of the facility for one year after it is completed.
It completed a diesel-fired power plant in the oil-rich Middle East country in June, earlier than scheduled and this may have had a positive impact on the December bid, according to STX officials. The firm is also jointly constructing another plant in Iraq with Italy’s ENI.
“The demand for power plants is rising in other Middle East nations such as Saudi Arabia, Jordan and the United Arab Emirates. We will never miss an opportunity,” a STX spokesman said.