DSME's viability in doubt: BCG consulting draft report
이 글자크기로 변경됩니다.
(예시) 가장 빠른 뉴스가 있고 다양한 정보, 쌍방향 소통이 숨쉬는 다음뉴스를 만나보세요. 다음뉴스는 국내외 주요이슈와 실시간 속보, 문화생활 및 다양한 분야의 뉴스를 입체적으로 전달하고 있습니다.
State-managed DSME has been under due diligence and consulting review by Boston Consulting Group (BCG) after the state lender Korea Development Bank (KDB), DSME’s main creditor, last year asked for consultation on measures to enhance DSME’s competitiveness.
The report draft, originally delivered to KDB in March, was recently unveiled at a time when Seoul authorities are looking into an option to sell the loss-making shipbuilder after the state’s earlier effort to merge it with bigger Hyundai Heavy Industries Group flopped due to the opposition from European Union antitrust authority last year.
KDB plans to decide on the fate of DSME after a final consulting result comes out in August or September.
Korea’s top three shipyards – Korea Shipbuilding & Offshore Engineering Co., DSME, and Samsung Heavy Industries Co. – are always in fierce competition amid lingering uncertainties from the shipbuilding industry’s frequent changes in business cycle, according to the BCG draft. They enjoy brisk vessel sales during an industrial boom but at the cost of vessel prices due to excessive competition that later results in massive losses once the industry enters a downturn, noted the draft report. The longer the recessionary cycle, the more threat financially-vulnerable DSME faces for survival, it concluded.
Korea’s top three shipbuilders won orders worth 17.49 million compensated gross tonnage (CGT) last year, boosting their total order backlog to 29.50 million CGT, which means that shipyards have enough orders for two to three years.
But their profitability is low because they are not able to receive full prices for their vessels due to intense competition. DSME in financial distress has been the most aggressive among the big three in lowering vessel prices to secure more orders, forcing the other two shipyards to give discounts to ship buyers, industry observers said.
KDB already warned of losses of DSME this year despite its growing new orders. DSME logged 1.7 trillion won ($1.3 billion) in losses last year and 500 billion won in the January-March period. DSME on Tuesday reported an operating loss of 569.6 billion won in the January-June period and a net loss of 667.9 billion won. The figures reflected 350 billion won in allowance for construction losses from a surge in fixed costs and other material costs, the company said.
The overall shipbuilding industry currently faces with the rising management uncertainty due to surges in the price of structural steel and labor costs and the prolonged sanctions against Russia for its war in Ukraine. KDB also noted that the months-long strike and dockyard occupation at DSME’s largest dock by unionized workers until recently has led to massive production setback and losses at DSME.
The final consulting report from BCG are supposed to come up with measures to improve DSME’s competitiveness but won’t be able to provide any breakthrough measures in the current conditions, said industry observers.
[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]
Copyright © 매일경제 & mk.co.kr. 무단 전재, 재배포 및 AI학습 이용 금지
- Korean factory automation parts maker WONST to go public next year - Pulse by Maeil Business News Korea
- Daewoong Pharm’s investigational hair loss injection may become available next year - Pulse by Maeil Business News Korea
- Samsung Elec ready to wow gamers with massive 55-inch curved gaming display - Pulse by Maeil Business News Korea
- SsangYong Motor loss smallest in 5 yrs on double-digit grown in shipments - Pulse by Maeil Business News Korea
- Korea ranks 7th in space technology patent, but distant with earlier group - Pulse by Maeil Business News Korea
- 강경준, 상간남 피소…사랑꾼 이미지 타격 [MK픽] - 스타투데이
- 분리과세로 노후 세금 폭탄 막아야, 기업은 적극적인 배당으로 ‘밸류업’
- 김호중, 음주운전 인정 “크게 후회하고 반성...실망감 드려 죄송하다”(공식입장 전문) - MK스포
- 이찬원, 이태원 참사에 "노래 못해요" 했다가 봉변 당했다 - 스타투데이
- 양희은·양희경 자매, 오늘(4일) 모친상 - 스타투데이