SEOUL–Daewoo Shipbuilding & Marine Engineering Co.’s (042660.SE) net profit in 2012 plunged 82%, primarily reflecting the decision it made in 2009 to book orders for ships at lower rates to stay afloat in the aftermath of the financial crisis.
In a further setback, the world’s third-largest shipbuilder by sales also lowered its order target for 2013, faced by a supply glut in the shipping industry and a fragile global economy. For the year, DaewooShipbuilding has set an order target of $13 billion, down 9% from its actual achievement of $14.3 billion last year.
Full-year net profit sharply declined to 137 billion Korean won ($125 million) from 743 billion won a year earlier, the shipbuilder said in a regulatory filing. Shipbuilders take years to deliver on orders and their financial accounts are based on the prices at which they take the order.
“Investment losses and provisions for the operation of its overseas unit in Romania dealt a heavy blow to the bottom line,” a company spokesman said by telephone, without elaborating.
In 1997, the company acquired a 51% stake in a Romanian shipbuilding company for 45 billion won. The remaining stake is held by a state-run company in Romania.
Operating profit also fell 55% to 451.6 billion won from 1.013 trillion won. Sales rose 2.5% to 12.565 trillion from 12.258 trillion won.
The company didn’t reveal its quarterly results.
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