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By Henry Ren (Bloomberg) Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to pass the extra costs on to consumers....
SEOUL–Daewoo Shipbuilding & Marine Engineering Co. (042660.SE) on Wednesday posted a 33% decline in its second-quarter net profit, due to earlier discounts the shipbuilder offered to boost sales.
Consolidated net profit for the three months ended June 30 fell to 96.4 billion Korean won ($85 million) from KRW142.78 billion a year earlier, the world’s third-biggest shipbuilder by sales said.
Operating profit plunged 63% to KRW114.1 billion from KRW308 billion while sales rose 9.3% to KRW3.951 trillion from KRW3.615 trillion.
As of Wednesday, the company achieved 71%, or $7.83 billion, of its order target of $11 billion for the year.
Earlier this month, Hyundai Heavy Industries Co. (009540.SE) and Samsung Heavy Industries Co. (010140.SE), Daewoo’s two bigger rivals, reported sharp declines in their second-quarter earnings due to the same reason.
In 2009, DaewooShipbuilding gave discounts to attract customers reeling from the 2008-2009 global financial crisis as orders fell sharply .
Shipbuilders typically book a large part of payments for vessels right before delivery, and the outlook continues to be bleak through early 2013 as they deliver low-priced ships for which the orders were booked a few years earlier, analysts say.
By Kyong-Ae Choi. (c) 2012 Dow Jones & Company, Inc.
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