Operating profit surges for Korean shipbuilder
Daewoo Shipbuilding & Marine Engineering, the world's third-largest shipyard, said that profit more than doubled last month as the company built more vessels at higher prices.Net income increased to 26.5 billion won, or $29 million, in the month from 11.9 billion won a year earlier, the company said on Thursday in an e-mailed statement from Seoul. Sales rose 45 percent to 556.8 billion won.Hyundai Heavy Industries, the world's largest shipyard, and other rivals are expected to report a surge in profit this year as they build vessels from orders they received when ship prices rose as much as 56 percent. Korean shipyards have already received more than half of their order targets this year."Daewoo Shipbuilding's figure is giving investors confidence that shipyards will report higher earnings this year and the next two to three years," said Song Jae Hak, an analyst at Woori Investment & Securities in Seoul. Song has a "buy" recommendation for Daewoo Shipbuilding shares.Operating profit, or sales minus the cost of goods sold and administrative expenses, surged to 25.2 billion won last month from 900 million won a year earlier.Shares of Daewoo shipbuilding gained as much as 5.7 percent to 48,950 won in Seoul. The stock has risen 64 percent this year, making it the eighth-best performer among 50 top companies on South Korea's Kospi index.Daewoo Shipbuilding said in the statement that it received $800 million in orders to build one drill ship for a U.S. company and three 180,000-ton bulk carriers for a shipping line in Liberia. The vessels will be delivered by June 2010, it said, without naming the purchasing companies."Orders for offshore products are resuming after a short period of lull, and we expect contracts to increase in the second half," Daewoo Shipbuilding said in the statement.The shipyard has received $7.3 billion worth contracts this year, 66 percent of its annual target of $11 billion. It had an order backlog worth $25.63 billion at the end of May. The Seoul-based company delivered seven vessels, including two liquefied natural gas carriers and two container ships.Ship prices, rising since 2003, have risen as much as 26 percent to record levels this year. Economic growth in China and other countries is increasing demand for iron ore, fuel and other goods, as well as the ships to transport them. China's trade surplus almost doubled in the first quarter, spurring economic growth of 11.1 percent. The World Bank estimates that global trade volumes may rise 7.7 percent this year.