Shares in the South Korean Daewoo Shipbuilding & Marine Engineering (DSME) plummeted by the daily permissible limit of 30% on Wednesday, following a media report that the company had amassed around KRW 2 trillion (USD 1.8 billion) of losses that have not yet been booked, according to local media.
Shares of one of the world’s largest shipbuilders traded at KRW 8,750 yesterday, the lowest in nearly seven years. DSME is expected to report huge losses in the second quarter of FY2015 due to a decline in orders amid a global economic slump.
The shipbuilder is also expected to report losses arising from the construction of previously ordered, low-priced ships and offshore facilities, which reportedly have not been booked yet. Low oil prices have negatively affected the number of orders for drillships and offshore facilities, as international oil majors are shying away from new orders and cutting their capital expenditure.
DSME has launched an internal investigation to look into the possible causes of the expected losses. The shipbuilder’s creditors, including Korea Development Bank, are said to be considering significant restructuring moves, which include the possibility of the sale of the company’s assets.
Back in May, DSME’s new CEO Jung Sung-leep announced massive restructuring to trim down losses, which include focusing on core business and disposing of underperforming subsidiaries. DSME identified its core business to be construction of merchant vessels, specialized vessels, and offshore vessels and facilities.
World Maritime News Staff