Published Date : Dec 06, 2017
Samsung Heavy Industries Co., the world’s third biggest ship building company, plans to raise US$1.4 billion by selling new shares in a rights offering in order to make up for the forecasted losses owing to slugging future of the global shipping industry. The company has projected its operating losses to swell up to 490 billion won in 2017, followed by 240 billion won in 2018.
The company is currently under a debt of over US$3.0 bn and has revealed its estimation of the offshore projects to further shirk, which will be drive further losses to the company all of this year and the next.
The slowness of Samsung Heavy to respond to the softening market conditions has been identified as the reason behind worsening situation. South Korea’s shipyards have not been able to overcome the losses post the global financial crisis owing to plunging oil prices and excess capacity across the world.
The demand for offshore drilling rigs and vessels have been stagnant and the previous year was particularly bad for the sector. It must be noted that in the recent past, fright rates have tumbled and even one time world’s largest container lines, Hanjin Shipping Co, has collapsed.
This announcement of losses by Samsung Heavy Industries has also resulted in drop in share prices of its primary rivals in Hyundai Heavy Industries Co and Daewoo Shipbuilding & Marine Engineering Co. All these three leading ship buildings in the world hail from South Korea.
The unfolding situation is currently being closely monitored by the Korea Development Bank and creditors are consistently reviewing the efforts taken by the company to overcome the nosedive.