Samsung Heavy Industries Reports Operating Loss of 13.4 Billion KRW in 3Q, Reducing Deficit Margin

[Asia Economy Reporter Hwang Yoon-joo] Samsung Heavy Industries announced on the 30th that it recorded an operating loss of 13.4 billion KRW on a consolidated basis for the third quarter of this year. Sales amounted to 1.6769 trillion KRW, and a net loss of 7.4 billion KRW was recorded. Compared to the previous quarter, the operating loss decreased by 694.3 billion KRW, while sales decreased by 14.6 billion KRW.

The slight decrease in third-quarter sales was explained by Samsung Heavy Industries as being due to delays in offshore project schedules caused by the temporary return of client personnel amid the COVID-19 pandemic, as well as schedule adjustments (slow down) in the merchant ship sector to improve dock efficiency.

The main reason for the reduced deficit was that while the second quarter saw large one-time losses such as impairment losses on drillships, the third quarter reflected one-time gains including additional settlements (change orders) for offshore projects and cost savings on materials.

Meanwhile, Samsung Heavy Industries’ net debt as of the end of the third quarter was 3.6 trillion KRW, an improvement of 200 billion KRW compared to the end of the second quarter (3.8 trillion KRW). This was due to an increase in the number of deliveries of heavy-tail structured ships, turning the cash flow into a surplus. In the fourth quarter, cash flow improvement is expected to expand as large advance payments are anticipated from orders of large-scale projects.

A Samsung Heavy Industries official stated, "The market conditions are gradually improving, as evidenced by the recent additional order of two crude oil carriers in Europe," and emphasized, "We will make every effort to achieve maximum order performance, focusing on large LNG projects during the remaining period."