Construction industry, shipbuilders see worst half on record for orders

The Korean construction and shipbuilding industries have seen the worst record of overseas orders in the first half of this year amid the sluggish economy and the aftermath of Brexit.

According to the International Contractors Association of Korea, the total value of overseas orders of local major construction companies reached 12.6 trillion won ($11 billion), dropping by 38.7 percent on-year. This is one fifth of their initial goal of making 62 trillion for this year. 

Samsung C&T recorded the highest overseas order value of 3.3 trillion won, which is less than half of the initial goal of 9 trillion won. Its orders mainly focused on the Asian market such as Singapore and Malaysia.

Hyundai Engineering stood at the second with 2.1 trillion won, dropping by 3.7 trillion won on-year.

Other construction companies also saw at least 1 trillion won of decline in the orders this year.

The value of the orders obtained in the Middle East market this year plummeted to $4.7 billion, down by 32 percent on-year, due mainly to the downfall of the oil prices, sources said.

Shipbuilders are also struggling with the decline in obtaining overseas contracts as more than 90 percent of their sales depend on the overseas orders.

The total value of the overseas orders of the three major shipbuilders -- Samsung Heavy Industries, Daewoo Shipbuilding and Marine Engineering and Hyundai Heavy Industries -- recorded $1.9 billion in the first half of this year. This only accounts for 4 percent of the total orders obtained in 2013 when the marine plant projects flooded from abroad.

In case of Samsung Heavy Industries, it has made no deals of building marine plants or merchant ships since October last year when a Malaysian company ordered for four oil tankers. This is the first time in seven years that the company has made no deals for such a long period.

The company is anticipating that the performance will likely be improved in the second half of this year as a number of deals are currently under discussion, sources said.

By Lee Hyun-jeong  (rene@heraldcorp.com)