By Kim Yoo-chul
Samsung Heavy Industries, the world’s second-biggest shipyard by sales, plans to buy a shipyard in Brazil to bolster its presence in South America’s biggest economy, financial analyst and sources familiar with the issue said, Monday.
“The Brazilian government has interests in seeking the revival of its ailing shipbuilding industry by letting foreign companies but stakes. Samsung Heavy is one of the few that are planning to buy a controlling stake in a troubled Brazilian shipyard,” said a senior fund manager.
“Samsung Heavy recently launched a taskforce to find a right target at affordable prices. It has approached one or two shipbuilders in Brazil. Given Samsung Electronics’ consistent investment in the country, the Brazilian government is expected to support Samsung Heavy,” said an official at a Samsung affiliate.
He said Samsung will invite strategic investors, if needed, to hedge the investment risks for the projects worth billions of dollars and added the Korean firm will possibly team up with other partners, there, for mutual growth.
Last year, Samsung sold a 6 percent stake in troubled Brazilian shipyard Estaleiro Atlantico Sul (EAS) to fix cash shortages of its Brazilian unit Samsung Heavy Industries Brazil.
The sale of its stakes in EAS boosted the total capital of the firm’s Brazilian affiliate to 55.5 billion won last year, from the previous year’s 110 million won. Net profit for the 2012 was 29 billion won, from a minus 32.5 billion won a year earlier, data from financial authorities showed.
Many Brazilian shipyards that were closed during an industry downturn in the early 1980s are being revived. Most are still suffering from a decline in profit, giving Samsung a chance to acquire shipyards that own patents and have highly-skilled workforces, said the officials.
Samsung plans to boost its annual revenue to 31 trillion won by 2020 from some 15 trillion won.
For the first three months of this year, it reported 3.89 trillion won in revenue, up 10 percent from a year earlier. The operating profit was 440 billion won, up 34 percent.
Samsung is the leading maker of drill-ships with a 42 percent global market share. It is also the sector leader in LNG carriers with 29 percent share as of the end of the first quarter.