New CEO Appointed at Daewoo Shipbuilding... Will They Find a Way to Independent Survival?

Park Duseon, New Shipyard Director, Appointed as CEO
Expecting Reduced Deficit in Second Half

Park Du-seon, Nominee for CEO of Daewoo Shipbuilding & Marine Engineering

[Asia Economy Reporter Oh Hyung-gil] Daewoo Shipbuilding & Marine Engineering (DSME) is appointing a new CEO and pioneering a path for independent survival. Although the financial burden has increased due to the failed sale to Hyundai Heavy Industries Group, the company plans to improve its structure through a performance rebound.

DSME held a board meeting on the 8th and decided to appoint Park Du-seon, the shipyard director, as the new CEO. Park, who will officially take office after the shareholders' meeting on the 28th of this month, graduated from the Department of Navigation at Korea Maritime University in 1982 and joined DSME in 1986.

He has held positions in ship production operations and special ship business management, was promoted to shipyard director in April 2019, and has been responsible for on-site safety as the Chief Safety Officer (CSO) since January this year.

Park’s appointment marks a record of rising to the CEO position after 36 years with the company, but the management situation is challenging. Not only must the company eliminate losses caused by the downturn, but improving the financial structure is also urgent. As of the third quarter of last year, DSME recorded sales of 3.1308 trillion KRW and an operating loss of 1.2393 trillion KRW. Sales decreased by more than 2 trillion KRW compared to the previous year, and the deficit widened by over 1.5 trillion KRW.

The loss was exacerbated by low-price ship orders due to sluggish market conditions and rising raw material costs such as shipbuilding steel plates. Although losses are expected to continue this year, the impact of low-price orders is expected to lessen, reducing the deficit from the second half of the year.

A worker is performing mega block work at the Okpo Shipyard of Daewoo Shipbuilding & Marine Engineering in Geoje. The COVID-19 pandemic has been ongoing for nearly two years. Countries around the world are implementing quarantine policies to overcome it and are putting all their efforts into escaping the disaster situation. The industrial landscape changed by COVID-19 is also responding swiftly. In particular, the shipbuilding business environment is expected to improve in 2022. With an increase in new orders, shipbuilders' price negotiation power has strengthened, and investment capacity for ships to comply with environmental regulations has expanded, welcoming the new year with sparks of improvement. / Geoje = Photo by Kang Jin-hyung aymsdream@

Improving the financial structure is also an urgent task. The plan to secure 1.5 trillion KRW through a merger with Korea Shipbuilding & Offshore Engineering to ease financial burdens was canceled, forcing the company to pursue independent survival.

DSME plans to improve performance focusing on LNG (liquefied natural gas) carriers, where it has strengths. Last year, DSME built 28% of the world’s large LNG carriers, securing unrivaled technological capabilities.

The first orders this year started with two LNG carriers from Maran Gas, and the company also secured an offshore plant for gas field control from Chevron, with LNG-related orders pouring in for both merchant ships and offshore plants. So far this year, DSME has secured orders worth approximately 2.72 billion USD (about 3.27 trillion KRW) for ships and offshore plants.

There is also growing interest in whether the company will be resold. KDB Industrial Bank plans to conduct management consulting for DSME until next month and decide on the sale policy.

This content was produced with the assistance of AI translation services.