'Bak Duseon-ho' Daewoo Shipbuilding & Marine Engineering... Plan B for Resale Emerges (Comprehensive)

New CEO Appointed... Can They Pave the Way for Independent Survival?
Park Du-seon, Chosun Shipyard Director, Named New CEO
Expecting Reduced Deficit from Second Half of the Year

[Asia Economy Reporter Oh Hyung-gil] Daewoo Shipbuilding & Marine Engineering (DSME) is appointing a new CEO and paving the way 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.

On the 8th, DSME held a board meeting and decided to appoint Park Doo-sun, 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 various roles including ship production operations and special ship business management, was promoted to shipyard director in April 2019, and took on the role of Chief Safety Officer (CSO) in January this year, overseeing safety at the site.

Park’s appointment marks a record of rising to the CEO position 36 years after joining 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.

Workers at Daewoo Shipbuilding & Marine Engineering Okpo Shipyard in Geoje are lighting up the evening darkness and focusing on finishing tasks before stern installation. The COVID-19 pandemic has lasted 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 quickly. 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. DSME had hoped to secure 1.5 trillion KRW in funds and ease financial burdens through a merger with Korea Shipbuilding & Offshore Engineering, but the plan fell through, forcing the company to pursue independent survival.

DSME plans to focus on improving performance centered 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.

Attention is also focused on whether the company will be resold. KDB Industrial Bank plans to conduct management consulting for DSME until next month and decide on a sale policy. Industry insiders believe that if a resale is attempted, the company is more likely to be sold to a business outside the shipbuilding sector rather than another shipbuilder.

Previously, the EU blocked the merger, citing that if Hyundai Heavy Industries acquired DSME, its market share in LNG carriers would exceed at least 60% in the future. For the same reason, Samsung Heavy Industries cannot acquire DSME.

Lee Dong-gul, chairman of the Industrial Bank, stated in January, "Privatization of DSME is essential for the normalization of the shipbuilding industry, and we plan to find a new owner domestically," adding, "We are reviewing Plan B to find a new owner who can take responsibility for management, including supplying ‘new money’ to DSME."

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