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소아쌤

Samsung Heavy to build first overseas facility

By Korea Herald

Published : Sept. 30, 2014 - 20:21

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Samsung Heavy Industries, a global leading shipbuilder, will spend 1 trillion won ($950 million) to build the company’s first overseas shipyard by 2017 as a part of its plans to revamp manufacturing operations, according to a high-ranking Samsung official.

The South Korean company is hoping to cut costs by producing lower-margin vessels at the overseas yard, while its domestic operations focus on upstream oil and gas projects.

“We believe there will be demand for offshore oil and gas projects in the long term,” said Chun Tae-heung, chief financial officer of Samsung Heavy Industries in an interview with the foreign press. “We want to make room at our shipyard in Korea to focus more on offshore and building higher-value ships.”
Samsung Heavy Industries chief financial officer Chun Tae-heung Samsung Heavy Industries chief financial officer Chun Tae-heung

Chun said that Indonesia, Vietnam and Malaysia are under consideration for the manufacturing facility site. Plans for the overseas yard will be finalized this year.

The comments from Chun came after Samsung Heavy said this month it will merge with Samsung Engineering to create a company that can compete more effectively with European rivals.

On Tuesday, the company’s CEO Park Dae-young said the merged entity will aim for sales of 40 trillion won by 2020, stressing that the merger deal will be the key to overcoming crises.

Demand for floating drilling and production facilities is expected to increase as oil companies go into deeper and harsher areas to look for new fields. Samsung Heavy expects to win at least $15 billion in new orders in 2015, Chun said. The company has received $5.5 billion of orders so far this year, of which more than half are for offshore products.

Samsung Heavy reported an operating loss of 362.5 billion won in the first quarter of this year after setting aside around 500 billion won for losses expected on offshore projects, but turned a profit in the second quarter.

“We will from now on win offshore projects that are profitable,” Chun said, adding that the firm has learned to be more cost-effective from previous projects.

By Park Han-na and news reports
(hnpark@heraldcorp.com)

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