DSME Reveals 2017 Self-Rescue Plan
South Korean shipyard Daewoo Shipbuilding & Marine Engineering (DSME) plans to implement 2.5 trillion won ($2.14 billion) worth of self-rescue measures this year.
The yard plans to cut its workforce by about 2,000 this year to 8,500 and to accelerate its divestment of non-core business units such as its IT division. It also plans to sell assets including buildings and floating docks.
The yard cut staff numbers by 2,000 last year and said it would implement its self-rescue measures totalling six trillion won by 2019, reports Yonhap news agency.
Meanwhile, the shipyard is targetting $5.5 billion in new orders this year.
South Korea’s top three shipyards, Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering, are expected to cut at least 4,000 jobs in 2017.
While the yards are reducing overheads, they are still expected to face financial challenges. DSME, the most troubled yard, has a high debt to equity ratio and faces liquidity issues: it posted a loss of roughly $1 billion in the first half of 2016 and it has about $850 million in debt coming due this year.
It recently received support totalling to $2.4 billion from its main creditors, KDB and Eximbank, but some analysts think this will be insufficient given the dearth of new orders.
Global consulting firm McKinsey said in October that out of South Korea's top three shipbuilders, DSME is the "least likely to survive by 2020." DSME disputed the findings, describing them as "based on completely false assumptions" and "unacceptable."