Despite the ambitious goals of local shipbuilders to attract more orders based on technological breakthroughs and more offshore plants, Korea’s heavy industries appear to have been hit by the rapid fall of the Japanese yen.
During the past four months, automakers and shipyards saw their combined market capitalization plunge 34 trillion won ($32 billion), industry data showed Sunday.
Companies selling to Japanese counterparts earn less due to a stronger won, while those who vie with Japanese firms in the global market lose their competitive edge because their rivals’ products get cheaper.
The combined market cap of local heavy industry firms, including automakers and shipyards, tumbled 19.2 percent to 142.8 trillion won as of last Friday, from last year’s second-half peak of 176.8 trillion won tallied on Sept. 17, according to local financial information provider FnGuide Inc. and industry data.
The figure is also down nearly 13 trillion won from last year’s low of 159.3 trillion won on July 25, the data showed.
Heavy industry has been one of the leading sectors that drive the local economy, Asia’s fourth-largest, which heavily depends on exports for growth.
As of last Friday, the proportion of heavy industries in the Seoul bourse reached 12.9 percent, coming in third in the total market cap after tech stocks with 26.5 percent and financial issues at 13.4 percent.
According to Korea’s central bank, the yen fell nearly 20 percent against the won in 2012.
To brace for exchange rate risks, the local auto industry, including top firm Hyundai Motor Group and its smaller affiliate Kia Motors Corp., have revised their outlook for the foreign exchange market this year, and began redrawing their management plans from scratch.
“We had estimated a 200 billion won loss in revenue when the won-yen cross-rate fell 10 won, but that factored in no currency volatility. We expect real losses are much worse given the pace of the weaker yen and that our shipments have increased recently,” a Hyundai Motor official said.
Shipyards, meanwhile, continue to expect a better year despite the external obstacles posed by the weak yen and sluggish global economic conditions.
Among the nation’s top three shipbuilders, Hyundai Heavy presented the most aggressive orders goal this year, set at $29.7 billion, up more than 50 percent from 2012.
Daewoo Shipbuilding & Marine Engineering also stepped up its order target by 18 percent to $13 billion, while Samsung Heavy Industries raised its goal by 35 percent to aim for $13 billion this year.
By Kim Ji-hyun and news reports
(
jemmie@heraldcorp.com)
