Samsung Heavy Industries remains in black with $46M profit

Samsung Heavy Industries stayed in the black for a second consecutive quarter, reporting an operating profit of 58.9 billion won ($46.1 million) driven by its focus on high-profit vessels including liquefied natural gas (LNG) carriers.

[SAMSUNG HEAVY INDUSTRIES]

Samsung Heavy Industries stayed in the black for a second consecutive quarter, reporting an operating profit of 58.9 billion won ($46.1 million) driven by its focus on high-profit vessels including liquefied natural gas (LNG) carriers.

Its operating profit turned to profit compared to last year when it posted an operating loss of 255.7 billion. It exceeded the market's forecasted operating profit of 42.3 billion won as compiled by FnGuide.

Samsung Heavy's revenue of 1.95 trillion won was a 36.4 percent increase from the same period last year. The figure exceeded market expectations of 1.93 trillion won and was the company's highest quarterly revenue since the fourth quarter of 2019, which stood at 2.16 trillion won.

The positive momentum continues from a successful first quarter of 2023 when Samsung Heavy turned profitable for the first time after 22 consecutive quarters of losses since the third quarter of 2017. There has been a significant increase in orders for high-value vessels, such as LNG carriers, since 2021. As ship construction progresses, shipbuilding companies receive payments for these vessels in sequence, ultimately leading to a surge in revenue. Samsung Heavy's operating profit margin for the second quarter was a notable 3 percent, more than doubling the previous quarter's 1.2 percent.

The contracts secured during the strong period of new shipbuilding orders amid the Covid-19 pandemic are gradually being reflected in the company's revenue. The shipbuilding industry primarily operates under heavy-tail contracts, in which over half of the payment is received after the delivery of the vessels.

"We achieved consecutive quarters of profitability in operating profit driven by the growing constructions for LNG carriers and large container ships," a Samsung Heavy official said. "Looking ahead, we anticipate a sustained improvement in profitability."

The company also reported a positive net profit of 23.2 billion, again surpassing market expectations of 20.7 billion won.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]