Daewoo Shipbuilding dips to 7-year low on loss woes

Major shipbuilder Daewoo Shipbuilding & Marine Engineering Co. plunged to a near seven-year low Wednesday afternoon on concerns it may have to book a cumulative loss of some 2 trillion won ($1.76 billion) on its balance sheet.

Stocks of Daewoo Shipbuilding were trading at 8,750 won on the Seoul bourse as of 1:21 p.m., down 3,750 won, or 30 percent, from the previous session's close.

The stock plunge came as the Chosun Ilbo, citing unnamed sources, reported that the shipbuilder has not booked the estimated loss stemming from the construction of low-priced ships and offshore facilities on its balance sheet.

The report also said its creditors, led by state-run Korea Development Bank, are reviewing massive restructuring moves for the shipbuilder, including asset sales.

Industry sources said Daewoo Shipbuilding may seek a voluntary debt rescheduling to tide over the worst performance in its history.

Daewoo Shipbuilding, one of the country's big-3 shipbuilders along with Hyundai Heavy Industries Co. and Samsung Heavy Industries Co., has been suffering because of shrinking orders amid the global economic slump for years.

In particular, local shipyards reported massive losses last year largely due to a rise in shipbuilding costs and losses from offshore plant construction.

For one, Hyundai Heavy swung to a net loss of 2.20 trillion won in 2014 from a net profit of 146.3 billion won the previous year.

It also recorded its biggest operating loss ever of 3.25 trillion won last year, a stark downturn from an operating profit of 802 billion won a year ago.

Daewoo Shipbuilding posted a loss of 172 billion won in the first quarter of the year, and logged an operating loss of 43.3 billion won.

The sources said the shipyard might have logged an operating loss of up to 3 trillion won in the second quarter.

As of early June, Daewoo Shipbuilding has secured $3.51 billion worth of deals for 23 ships so far this year. (Yonhap)