Samsung Heavy Industries and HD Korea Shipbuilding & Marine Engineering rally in orders
Hanwha Ocean’s ‘profit maximization’ has poor impact
Some are concerned about ‘post-acquisition integration noise’
In the long run, ‘engineering’ will be the driving force
Since the beginning of the year, only HD Korea Shipbuilding & Marine Engineering and Hanwha Ocean (042660) have maintained zero orders, drawing attention to the background. Although the dominant analysis is that it is the result of concentrating capabilities on high value-added ships that make money, some say that the personnel innovation implemented by Hanwha Ocean in the process of integrating Daewoo Shipbuilding & Marine Engineering has led to the recent slump in orders.
According to the industry on the 9th, Samsung Heavy Industries is expected to sign two contracts for floating liquefied natural gas production facilities (FLNG) within the first half of the year at the earliest. The contract size for the two projects alone is estimated to be around 5 trillion won. This is a very large contract, similar to the cumulative sales in the third quarter of last year.
HD Korea Shipbuilding & Marine Engineering has also been reporting good news about receiving orders for merchant ships one after another since the beginning of the year. A contract was signed for the construction of four liquefied petroleum gas (LPG) and ammonia carriers and 15 petrochemical product carriers. The three contracts combined are worth 1.5 trillion won.
On the other hand, Hanwha Ocean has had no news of orders received this year. Although both competitors achieved around 100% of the order intake target set last year, only Hanwha Ocean achieved less than 50%. While competitors signed contracts for around 20 ships, Hanwha Ocean received no orders at all.
The industry cites ‘selective order receipt centered on profitability’ as the reason for Hanwha Ocean’s sluggish order intake. After acquiring Daewoo Shipbuilding and Marine Engineering last year, Hanwha Ocean decided to focus on high value-added ships that can make money. Regarding the recent prediction by some that the company may close down its container ship business, Hanwha Ocean explained, “We are establishing a sales strategy for each ship type to maximize profits.” Some are concerned that there may be problems with post-acquisition integration work. Integrations between different businesses, such as Hanwha and Daewoo Shipbuilding & Marine Engineering, tend to guarantee the acquired company’s autonomy for a while and require minimal personnel changes. However, after the acquisition, Hanwha drastically changed its management team and replaced former Hanwha employees with new management. The current vice president is an energy expert who served as CEO of Hanwha Energy and Hanwha Total Energy. The newly appointed general manager of the Geoje plant (shipyard) in December of last year is also from a Hanwha affiliate. In terms of strategy and personnel, most people are from Hanwha. This means that the sales strategy that has been in place for more than 20 years is bound to change completely as the management is filled with people who are far from the shipbuilding industry.
There is also an analysis that interest in the largest merchant ship business is decreasing as the company focuses on offshore wind power and ship businesses that can create synergy with Hanwha Group.
There is also an interpretation that it is a painful process of cutting bones in order to innovate Hanwha Ocean’s constitution in the long term. Hanwha is currently establishing a ‘long-term plan’ and examining areas where synergy can be created together at the group level. It is assessed that in order to change the constitution of Daewoo Shipbuilding & Marine Engineering, which has been somewhat lax in management regardless of profitability in the past, it must endure the pain of a drastic break with the past. An industry official explained, “Hanwha is ultimately putting a lot of effort into the offshore wind power business while establishing a strategy to become an ‘engineering company.’”
2024-01-09 08:43:30
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