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Hyundai Heavy and two affiliates plagued by dearth of orders

All Headlines 10:05 April 11, 2016

SEOUL, April 11 (Yonhap) -- Hyundai Heavy Industries Co., a major South Korean shipyard, and its two affiliates, have suffered a sharp drop in their orders in the first two months of the year amid a protracted industry slump, industry sources said Monday.

According to the sources, Hyundai Heavy, Hyundai Mipo Dockyard Co. and Hyundai Samho Heavy Industries Co. clinched a combined US$1.31 billion worth of orders during the January-February period, compared to the previous year's $2.55 billion.

Their shipbuilding orders amounted to a meager $372 million, 74 percent down from a year earlier, indicating that tough business conditions still lie ahead.

Hyundai Heavy suffered a second consecutive year of deficit with 1.36 trillion won in losses last year, compared to 2.21 trillion won a year earlier.

The nation's big three shipyards -- Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. -- racked up a combined loss of 7.7 trillion won last year, due to increased costs from a delay in the construction of offshore facilities and order cancellations.

It was the first time that all three of the nation's largest industry players registered losses.

They are struggling to tide over worsening business conditions, but have failed to clinch new large orders for the past three months, feeling the pinch of low demand.

Lower oil prices have been leading to a drop in demand for new ships and offshore facilities, and Chinese rivals have scooped up a large slice of orders for smaller ships, in particular.

The order backlog held by South Korean shipbuilders has dropped to the lowest level in 12 years amid the slumping global economy.

According to the data by global researcher Clarkson Research Services, South Korean shipbuilders had an order backlog totaling 27.59 million compensated gross tons (CGTs) as of end-March, the lowest since March 2004, when the comparable figure was 27.52 million CGTs.

Experts say that the order backlog held by shipyards here will keep them busy for just one or two years.

sam@yna.co.kr
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