As domestic competitor DSME struggles to meet its obligations, Hyundai Heavy Industries is on the march, settling contract disputes and negotiating with buyers for up to $1 billion in new sales.
According to the Korea Herald, sources within the shipbuilding industry say that HHI is in talks with two shipowners for a series of up to 12 tankers, including options. The yard has signed firm contracts for four vessels already this year, including two VLCCs.
Unlike most of its competitors, HHI turned a healthy profit last year, bringing in $600 million – a dramatic turnaround from the $1.2 billion loss it posted in 2015. It says that its financial performance will improve even more when it spins off its non-core businesses, including its green energy, robotics and electrical equipment divisions, and analysts like Jung Dong-ik of KB Securities agree. "With this division, independence and responsible management of each business line becomes possible, and efficiency and cost reduction effects are expected," Jung told South Korea's MK News.
However, HHI’s union has been highly critical of the restructuring plan, contending that it is a serious threat to its members’ interests. The dispute has already led to the union’s first major strike in 23 years, and Korean analysts suggest that labor actions, litigation and local political opposition could continue for some time.
Moving past cancelations
Hyundai Samho Heavy Industries, an HHI subsidiary in Yeongam, has recently settled with John Fredriksen's Seadrill over the cancelation of the semisubmersible West Mira, which was originally ordered for charter to Husky Oil. Hyundai Samho had sought arbitration, but it has agreed to return Seadrill’s down payment and sell the rig to another Fredriksen-controlled entity instead. Seadrill will receive $170 million refund, and Fredriksen’s Seatankers will pay $370 million to buy the rig. Despite this switch, Seadrill will likely end up using the semisubmersible anyways: the company says that it expects to sign an agreement with Seatankers for management of the West Mira, as well as the right to buy it at a future date.