By Park Jin-hai
Major shipbuilder Daewoo Shipbuilding & Marine Engineering’s share prices plunged to a near seven-year low Wednesday, over concerns that it concealed a cumulative loss of some 2 trillion won which was omitted from its balance sheet.
It didn’t book the estimated loss stemming from the construction of low-priced ships and offshore facilities on its balance sheet.
Its creditors, led by the Korea Development Bank, are now reviewing the possibility of a bailout program and asset sales, because the firm’s second quarter operating loss are expected to reach 3 trillion won.
Daewoo Shipbuilding, one of the country's big-3 shipbuilders along with Hyundai Heavy Industries and Samsung Heavy Industries, has been suffering losses because of shrinking orders amid the global economic slump for years.
Hyundai Heavy recorded its biggest operating loss ever of 3.25 trillion won, while Samsung Heavy’s operating profits plunged to one fifth of the previous year in 2014.
Daewoo Shipbuilding posted a loss of 172 billion won in the first quarter of this year, and logged an operating loss of 43.3 billion won. But, it alone reported 471.1 billion won operating profit last year.
Industry watchers have long suspected that its performance was better than rivals because it didn’t book the loss.
Its 600 billion won worth of contracts it signed in 2011 to manufacture four drilling ships hit the company hardest because its manufacturing period was delayed by up to one year for each ship, they said.
Stocks of Daewoo Shipbuilding closed at 8,740 won on the Seoul bourse, down daily price limit of 30 percent, from the previous session's close.
Local shipyards reported massive losses last year largely due to a rise in shipbuilding costs and losses from offshore plant construction.
As of early June, Daewoo Shipbuilding has secured $3.51 billion worth of deals for 23 ships so far this year.