Samsung Heavy Quarterly Loss Worse Than Estimate on Costs, Delay

  • Loss due to compensation cost amid revamp, rig behind schedule
  • Savings of 50 billion won seen each quarter from now

Samsung Heavy Industries Co., the world’s third-largest shipbuilder, reported a quarterly loss that was bigger than estimates as a delay in the delivery of a rig and worker compensation amid a revamp escalated costs.

Net loss, excluding minority interest, narrowed to 185.7 billion won ($166 million) in the three months to June, from 1.15 trillion won a year earlier, the company said in a regulatory filing Friday. The average estimate of nine analysts was for a loss of 94.3 billion won, according to data compiled by Bloomberg. Sales dropped 89 percent to 2.72 trillion won.

The world’s top three shipyards, all South Korean, plan to raise a combined 8.41 trillion won through asset and share sales as orders have dried up this year. They are among Asian shipbuilders that are reeling from a slowing global economy and a slump in oil prices, which have led to losses or smaller profits last year and prompted them to cut jobs.

The company, in a separate statement, attributed the numbers to potential losses from a semi-submersible rig its building that’s behind schedule.

Worker Packages

About 210 billion won in compensation packages to workers leaving as part of a voluntary early retirement program and other job cuts also added to the loss, the shipyard said. Starting from the current quarter, Samsung Heavy will be able to save about 50 billion won every three months, it said.

Operating loss narrowed to 283.7 billion won in the second quarter from 1.55 trillion won a year earlier. That’s worse than the average estimate of 114.6 billion won from eight analysts, according to data compiled by Bloomberg.

Samsung Heavy shares dropped 4.4 percent to close at 9,940 won in Seoul before the announcement. The stock has fallen 8.4 percent this year, compared with a 2.8 percent gain in the benchmark Kospi index.

South Korea will take more active steps to help the nation’s shipping and shipbuilding industries reduce debt and weather the global slump, the Financial Services Commission said April 26. Lenders will regularly review the progress of restructuring plans that are submitted by companies, the government has said.

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