Samsung Heavy Industries Reports 854.4 Billion KRW Loss Last Year... "Turning Profit This Year"

Advance Reflection of Cost Increases Including Fixed Costs and Outsourcing Expenses
Operating Profit Expected to Reach 200 Billion KRW This Year

[Asia Economy Reporter Choi Seoyoon] Samsung Heavy Industries, which posted a deficit of around 800 billion KRW last year, has announced a turnaround to profitability this year. This is because steady order performance and ship price recovery will be fully reflected starting this year. If the performance meets expectations, it can break the chain of losses that has continued since 2015.

Samsung Heavy Industries disclosed on the 30th that its consolidated sales last year amounted to 5.9447 trillion KRW, a 10.2% decrease compared to the previous year. The operating loss was recorded at 854.4 billion KRW. Samsung Heavy Industries explained, "We pre-reflected cost increases such as fixed cost burdens, slowdown in steel price stabilization, and increases in outsourcing and labor costs due to manpower shortages."

However, on the same day, Samsung Heavy Industries announced in a disclosure titled 'Outlook on Operating Performance Based on Consolidated Financial Statements' that it expects annual sales of 8 trillion KRW and an operating profit of 200 billion KRW this year. This is due to the orders received since 2021 entering the full-scale construction schedule and the effect of reduced fixed cost burdens from increased sales. In particular, liquefied natural gas (LNG) carriers, a representative high value-added ship type, are considered the key to improving Samsung Heavy Industries' profitability.

LNG carrier built by Samsung Heavy Industries
[Photo provided by Samsung Heavy Industries] [Image source=Yonhap News]

Samsung Heavy Industries exceeded its order targets for two consecutive years by securing orders worth 12.2 billion USD and 9.4 billion USD in 2021 and 2022, respectively. During the same period, the number of LNG carriers ordered reached a total of 58 ships, amounting to 12.2 billion USD. This accounts for 56% of all ordered vessels. Thanks to the expansion of LNG carrier construction, Samsung Heavy Industries announced its annual sales forecast for this year at 8 trillion KRW, a significant increase from last year's 5.9447 trillion KRW.

Meanwhile, Samsung Heavy Industries set its order target for this year at 9.5 billion USD, higher than last year's performance of 9.4 billion USD.

A Samsung Heavy Industries official said, "We have secured construction volume for more than 2.5 years and plan to continue a profitability-focused order strategy this year as well. In particular, based on overwhelming competitiveness in the floating liquefied natural gas production facility (FLNG) market, where global investment reviews are actively underway, we will do our best to achieve the order target for the third consecutive year."