Samsung Heavy Industries Co., one of South Korea’s three largest shipbuilders, extended its losses for the fourth straight quarter due to increased fixed expenses and higher commodity costs.
According to its regulatory filing on Wednesday, the company posted an operating loss of 127.3 billion won ($111.7 million) on a consolidated basis in the quarter ended September, swinging into the red from the same period a year ago and deepening the losses by 26.7 percent from the previous three months.
Sales were down 25 percent on year and 2.4 percent on quarter to reach 1.31 trillion won.
On Thursday, shares of Samsung Heavy fell 8.76 percent to close at 6,350 won.
The company said the widened losses were largely due to an increase in selling, general and administrative expenses and other fixed costs as well as a 177 billion won jump in the costs of steel products and equipment. It also had to shoulder a one-off cost of 90 billion won from the recent three-year wage agreement.
Korean shipbuilders have been encouraging workers to go on early retirement to streamline against prolonged business slowdown.
The shipbuilder was able to soften the blow to its financial statements with a 200 billion won gain in additional charges on the bill of one of its major projects. In August, it delivered a floating production storage offloading (FPSO) unit to Nigeria’s Egina oilfield, a $3.4 billion deal that was the largest-ever FPSO order at the time.
The shipbuilder said its revenue fell in the third quarter due to the reduced number of working days from summer vacation and the Chuseok holiday in September. The company expected sales to recover in the final quarter once the number of working days returns to normal.
As of late September, the company’s net borrowings amounted to 1 trillion won, down 68 percent compared to late 2017 when the figure stood at 3.1 trillion won. Its debt ratio also fell from 138 percent to 102 percent over the same period.
Samsung Heavy on Thursday revised its sales and earnings estimates for 2018. It predicted that its operating losses would worsen to 420 billion won from 240 billion won while revenue would climb to 5.5 trillion won from 5.1 trillion won.
Source: Pulse
