Yonhap reported that South Korean shipbuilders are seeking to diversify their business portfolios as declining orders stemming from the global economic recession are threatening to eat into their earnings.
Orders to South Korean shipyards have surged over the past few years, but demand for new vessels has dropped sharply since the third quarter of this year as worldwide financial turmoil erodes sales of commodities and consumer goods. In the first two months of 2009, only Samsung Heavy Industries Co has won a single shipbuilding order valued at USD 680 million. To compound their woes, shipping lines worldwide reportedly are demanding that orders be canceled and delivery of new ships be delayed.
Mr Lee Jae won analyst at Tong Yang Investment Banking Corporation said that "It is worrisome that major shipbuilders have not won orders so far this year. Although they have massive order backlogs, the declining trend of new orders is expected to hurt the industry to some degree."
Hyundai Heavy has recently started working on a KRW 100 billion project to build a plant that makes wind power generators. It is already involved in a solar energy business project. In 2006, the company exported USD 60 million worth of solar cell related equipment to Spain. It expects its sales of solar cells and solar modules to reach one trillion won in 2010 on rising demand for alternative energy.
Samsung Heavy Industries Co has followed suit. It announced plans late last year to develop offshore wind power generating facilities with a capacity of up to 5 MW. It also is considering launching a desalination facility related business.
Daewoo Shipbuilding & Marine Engineering Co is also actively engaged in a construction project. It recently signed a MoU with the government of Oman to develop an industrial area there. If finalized, the estimated at KRW 15 trillion deal will be the biggest overseas contract ever won by a South Korean firm. It has also established a JV shipping company with the Nigerian National Petroleum Co to carry crude oil.
Source: Steel Guru