[Yonhap News Photo]
The head of Daewoo Shipbuilding and Marine Engineering, one of South Korea's three top shipbuilders, voiced optimism about the company's survival through painful restructuring Thursday after it clinched crucial orders worth 554 million US dollars from its Greek client.
Lloyd's List, a London-based shipping news provider, said that Daewoo Shipbuilding has received orders from Angelicolussis Shipping Group to build eight more vessels "in a billion-dollar vote of confidence" for the troubled yard.
The Greek group is placing orders for two LNG carriers at an estimated $190 million each with fixed price options for up to two additional vessels, and orders for two giant crude carriers for about $87 million each plus two separate options, it said, describing Angelicolussis as one of the shipyard's "strongest and most consistent" clients..
Daewoo Shipbuilding CEO Jung Sung-leep said the new orders demonstrated the shipyard's high technology level and competitive edge in shipbuilding.
He opposed any rapid overhaul of South Korean shipyards but admitted they should gradually reduce their production capacity to focus on high value-added products. "The labor-intensive shipbuilding industry ... is no longer the golden goose which once made a huge profit," he told reporters during his trip to Greece.
Jung said he was optimistic about the future and rehabilitation of Daewoo Shipbuilding saying the shipyard could switch back to the black in the second half of this year, helped by an expected rise in oil prices.
However, he suggested Daewoo Shipbuilding should curtail facilities for offshore plants by up to 25 percent and increase the production of merchant ships to ride out its liquidity crisis.
He also supported the idea of separating Daewoo Shipbuilding's defense section for its independent survival. "I believe work on its (separation) will be completed in the second half of next year."
Daewoo Shipbuilding and two other top South Korean shipyards have been under creditor-led restructuring to reduce snowballing debts that have weighed heavily on creditor banks and prompted government officials to set up an 11 trillion won restructuring fund.
Last year the shipyard, hit by a delay in the construction of offshore facilities and the cancellation of orders, posted a record net loss of 5.13 trillion won, compared with a profit of 33 billion won a year earlier.
Like other South Korean shipyards, Daewoo was the victim of a protracted slump in the global shipbuilding industry. Demand has been weak due to low oil prices while competition with Chinese rivals has intensified. Oil companies have reduced spending while rig owners have canceled orders or asked for delayed ship delivery.
On Wednesday, prosecutors raided Daewoo's offices and shipyard in a probe into allegations that its former executives were engaged in window dressing and accounting fraud to secure a continued flow of bank loans.
The raid followed a travel ban on former CEO Nam Sang-tae, who headed the troubled shipbuilder from 2006 to 2012, and his successor, Ko Jae-ho. They have been accused of manipulating financial statements to cover up the real size of debts.
In January, auditors of the shipyard filed a petition asking prosecutors to launch a probe into its former executives for concealing huge losses in 2013 and 2014.
Aju News Lim Chang-won = cwlim34@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
