Deep-Sea Plan Fails, Leaving Korean Shipyards Struggling
“It took more effort than they expected,” KERI’s Yang said. “It turned out to be a bit of a challenge.”
The timeframe to build a rig -- about 40 months, compared to 18 months for a tanker ship -- and the common practice of backloading most payment until delivery has left the companies burning through cash.
Cash Crunch
At Daewoo Shipbuilding, available cash fell to 87.9 billion won in the first quarter of 2015 from 238 billion won a year earlier. Samsung Heavy’s cash position fell to 152.2 billion won in the first quarter from 1.1 trillion just six months earlier.
“I think the current situation is the bottom for the shipbuilders,” Yang said. “South Korean shipbuilders will be able to recover from this slump. They should learn from their mistakes and focus on increasing their technical competitiveness.”
(An earlier version of this story incorrectly reported the date of Samsung Heavy earnings)
--With assistance from Kyungji Cho in Seoul.
To contact the reporters on this story: Rose Kim in Seoul at rkim76@bloomberg.net; Jungah Lee in Seoul at jlee1361@bloomberg.net; Michael S. Arnold in Hong Kong at marnold48@bloomberg.net To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net Michael S. Arnold
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