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Daewoo Shipbuilding swings to net loss in 2021 amid weak orders

Industry 19:45 March 08, 2022

SEOUL, March 8 (Yonhap) -- Daewoo Shipbuilding & Marine Engineering Co. (DSME) said Tuesday it swung to a net loss last year, as orders for new ships declined amid the global pandemic.

The net loss came in at 1.7 trillion won (US$1.4 billion) in 2021, the company said in a regulatory filing. It marks the first time since 2016 the shipyard has posted an annual net loss.

The corporate logo of Daewoo Shipbuilding & Marine Engineering Co. (DSME) (PHOTO NOT FOR SALE) (Yonhap)

The shipyard posted an operating loss of 1.8 trillion won last year, and sales also plunged 36.2 percent on-year to 4.5 trillion won.

DSME cited a sharp fall in sales stemming from weak orders over the past few years and the increased reserve it set aside for losses amid rising raw material prices as main reasons for the lackluster business performance.

Global prices of raw materials, including steel, increased, resulting in the shipyard reflecting reserves for construction loss worth 1.3 trillion won.

DSME, however, said it obtained new orders last year that surpassed the annual order target of the next three years, which will eventually lead to improved earnings down the road.

The shipyard also said it is making efforts to improve its profitability by focusing on securing orders for LNG carriers and LNG-powered ships.

Shares in DSME closed at 25,850 won on the main Seoul bourse, down 4.79 percent from the previous session, underperforming the broader KOSPI's 1.09 percent fall. The earnings result was released after the KOSPI closed.
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