Hanwha Ocean "Executing Half of 1.5 Trillion Won Capital Increase for Overseas Shipyard Acquisitions Within This Year"

Last Year's Performance Announcement... Deficit Significantly Reduced
Sales Reach 7.4083 Trillion KRW, Up 52% YoY
"Qatar Contract Expected to be Finalized as Early as March"

Hanwha Ocean announced on the 21st that "we are pursuing the acquisition of an overseas shipyard and plan to execute nearly half of the capital increase amount within this year, including this acquisition."

Hanwha Ocean stated during the conference call following the announcement of last year's performance that "there has been no significant expenditure so far from the 1.5 trillion KRW capital increase conducted last November for facility funds, acquisition of overseas subsidiaries, and operating funds."

Earlier, regarding the article reported last October about the acquisition of the US Philly Shipyard, Hanwha Ocean issued a clarification disclosure on the 8th, stating, "We are reviewing various options related to overseas businesses, including Philly Shipyard, but nothing has been finalized yet." Hanwha Ocean plans to secure overseas production bases and use them as footholds to enter the overseas naval shipbuilding and maintenance, repair, and operations (MRO) business.

Regarding the Qatar liquefied natural gas (LNG) carrier orders, Hanwha Ocean said, "We are negotiating with the shipowner keeping multiple possibilities open and are in the final stages. We are exploring various aspects such as improving contract terms, but since competitors have outlined some parts, we are discussing comprehensive collaboration opportunities with Qatar."

They added, "A conclusion may come as early as March," and "We are not ruling out orders for the (260,000㎥ scale) Q-Max class."

Regarding the recent suspension of new LNG project permits in the US, they said, "After thorough internal review, we believe it will be difficult for this to have a direct impact on the LNG orders we are targeting." They also stated, "Once the Qatar part is settled, shipowners who have been holding back on new orders are expected to proceed with orders for special vessels as well, and we anticipate many additional LNG newbuilding inquiries in the first half of this year."

When asked why their order intake is slower compared to other shipbuilders, Hanwha Ocean explained, "Since being acquired by Hanwha Group, there has been a process of setting up dock operation strategies and sales strategies. Above all, since there is sufficient volume secured at the yard, the intention was not to rush additional orders." They added, "This year, we plan to steadily proceed with a stable order backlog of about 2.5 to 3 years, focusing on minimizing risks and selecting orders based on profitability. By 2027, we will have more available slots than other shipbuilders, which we will strategically utilize as a premium to secure orders."

Hanwha Ocean also announced that it recorded an operating loss of 196.5 billion KRW on a consolidated basis last year, significantly reduced from the previous year's loss of 1.6136 trillion KRW. Sales increased by 52.4% year-on-year to 7.4083 trillion KRW. Net profit turned positive to 160 billion KRW.

Shin Yong-in, Chief Financial Officer (Vice President), commented on last year's performance, saying, "The volume of commercial shipbuilding increased due to workforce expansion including foreigners, and in the offshore projects, sales increased as design was completed and production started. Although operating profit turned positive in the third quarter, we could not achieve an annual profit due to the rise in total estimated costs of ongoing projects and one-time costs such as wage increases after acquisition."

Hanwha Ocean's Sales and Operating Profit Last Year [Image Source=Hanwha Ocean]

By business division, the commercial shipbuilding division, which accounts for 79% of total sales, recorded sales of 5.818 trillion KRW and an operating loss of 482.8 billion KRW. The special ship division posted sales and operating profit of 883.4 billion KRW and 82.1 billion KRW, respectively. The offshore division achieved sales of 977.1 billion KRW and operating profit of 146.5 billion KRW.

Regarding this year's performance outlook, Shin said, "In the commercial shipbuilding business, the sales proportion is expected to increase to 80% of total company sales due to the construction of more than 20 LNG carriers and large container ships. We expect to achieve an annual operating profit turnaround as many large container ships ordered at low prices will be delivered within the first half of this year."

He added, "The special ship business is expected to see sales growth mainly from submarines and submarine overhaul and repair. For the offshore business, although there is a possibility of an increase in total estimated costs such as subcontracting costs in the first quarter, the increase will be limited as the rise has already been conservatively applied."