Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Hanwha stops disclosing goal for shipbuilding orders after underperforming in 2023
Hanwha Ocean's shipyard on Geoje Island, South Gyeongsang Province / Courtesy of Hanwha Ocean
By Park Jae-hyuk
HD Hyundai seeks to win more naval ship orders in 2024
Hanwha Ocean decided not to disclose its annual target for shipbuilding orders this year, after the company managed to achieve 57 percent of its goal of winning $7 billion worth of orders last year, according to industry officials, Thursday.
The shipbuilding unit of Hanwha Group explained that its decision is intended to sort out lucrative orders, as it has already won enough orders recently.
However, the unusual move is also interpreted as an attempt to avoid comparison with its competitors, such as Samsung Heavy Industries and HD Korea Shipbuilding & Offshore Engineering (KSOE), an HD Hyundai subsidiary that manages three shipyards in Korea.
In 2023, Samsung Heavy reached 87 percent of its goal of winning $9.5 billion worth of orders. Although the company has yet to disclose its annual order target this year, it is expected to unveil its goal at the end of January as usual.
HD KSOE achieved 142 percent of its goal of winning $15.7 billion worth of orders last year, thanks to a contract with QatarEnergy in October regarding the construction of 17 liquefied natural gas (LNG) carriers worth $3.9 billion. Hanwha Ocean and Samsung Heavy failed to sign similar deals with the Middle Eastern country by the end of last year.
Considering the increased workloads and declining global demand for commercial vessels, HD KSOE slashed this year’s target for commercial ship orders by 46 percent from a year earlier.
However, it raised the target for naval ship orders by 615 percent, as the navies of Korea, Canada, Poland and the Philippines are set to place large-size orders for surface combatants and submarines amid intensifying geopolitical tensions.
As a result, its overall target went down 14 percent from the year before.
“Due to concerns over underperformance, shipbuilders tend to come up with conservative goals,” Hi Investment & Securities analyst Byun Yong-jin said. “Considering the fact that HD KSOE overachieved its goal last year, it may win larger orders than planned again this year.”
Securities analysts expect Samsung Heavy and HD KSOE to post 235.8 billion won ($180 million) and 301.9 billion won respectively in their 2023 operating profits.
In contrast, Hanwha Ocean’s operating loss last year is estimated at 108.3 billion won, although the company started making quarterly operating profits in the third quarter of 2023.
Hanwha Ocean did not receive any container ship orders in 2023, under the control of Hanwha Group, a defense industry powerhouse that changed the shipbuilder’s name from Daewoo Shipbuilding & Marine Engineering after its acquisition last year. It only won orders for five LNG carriers, five ammonia carrier and seven naval ships.
Last December, the company also replaced Jung In-sub, head of its shipyard on Geoje Island, South Gyeongsang Province, with Vice President Lee Gil-seob, who oversaw the materials business at Hanwha Solutions. His abrupt appointment came after the company replaced its chief financial officer and the head of the offshore business unit.