Hyundai Heavy Industries fell 1.3 per cent on Tuesday, a day after the world’s largest shipbuilder by sales said it swung to a net loss of Won233.7bn ($206m) in the April to June period, from a net profit of Won182.8bn a year earlier. Sales dropped 26.4 per cent to Won3.12tn in the quarter.
Samsung Heavy Industries slid 2.4 per cent and Daewoo Shipbuilding and Marine Engineering shed 4.1 per cent, underperforming a 0.5 per cent gain for the benchmark Kospi Composite index.
Samsung Heavy on Monday reported a net loss of Won142.7bn in the second quarter versus a net profit of Won22.7bn a year earlier.
South Korea is home to the world’s three biggest shipbuilders. Second-ranked Daewoo Shipbuilding is scheduled to announce quarterly results later this month.
Despite some uncertainty over the industry outlook, there are signs that big Korean shipyards are slowly emerging from a prolonged slump that has resulted in billions of dollars in losses in recent years.
However, the deepening trade war between the US and China is renewing fears of a negative impact on global trade. Shares in the South Korean trio have fallen about 20 per cent over the past two months.
Hyundai Heavy blamed its poor results on higher steel plate prices and one-off costs such as provisions for lossmaking shipbuilding projects as well as compensation for 700 laid-off employees. The job cuts came as the company prepares to suspend work at some of its shipyards because orders for offshore energy facilities have dried up.
However, “the losses are not that worrisome because Hyundai Heavy reported a small operating profit excluding negative one-off factors,” Hwang Eo-yeon, an analyst at Shinhan Investment, said in a report.
“We are still seeing a recovery of the industry cycle with new orders picking up and ship prices rising. But difficulties remain due to higher raw material prices and thin order backlogs,” Hyundai Heavy said.
Hyundai Heavy has won $7.9bn in new orders for 92 vessels so far this year. Its full-year ship orders are expected to increase to $12.8bn from $10.5bn last year, thanks to increasing orders of gas carriers and container vessels, according to Shinhan.
Third-ranked Samsung Heavy Industries has won $2.9bn in new orders for 29 ships so far this year.
South Korea’s shipbuilders have been under financial strain for years due to persistent overcapacity since the 2008 financial crisis.
They were also hit hard by costly offshore energy projects but their financial situation has improved in the past year, helped by rights offers and state funding.