Samsung Heavy Industries Books Largest Order as Korean Shipbuilders Rebound

Samsung shipbuilding Korea
Samsung Heavy Industries booked its largest order ever with LNG carriers linked to Qatar (file photo)

Published Feb 6, 2024 6:13 PM by The Maritime Executive


South Korea is highlighting a strong rebound in its shipbuilding industry with the second largest company, Samsung Heavy Industries, reporting it has signed the largest order in the company’s history. The new order, which rivals the largest order ever placed in South Korea, comes as the companies are reporting a strong start to 2024 and improving financial results.

SHI signed an order for 15 new LNG carriers each with a capacity of 170,400 cbm. The company highlighted that the order will be delivered by October 2028 giving it steady work for the next five years. Although they did not officially confirm the buyer saying only it is a “Middle East shipowner,” the deal is part of the ongoing expansion program being driven by QatarEnergy. SHI was reported since October 2023 to be negotiating the terms of the order based on the 2020 slot reservation from QatarEnergy.

The new contract is being valued at approximately $3.4 billion which exceeds the previous largest order received by SHI in July 2023 from Evergreen for 16 methanol-fueled containerships which was valued at around $3 billion. The largest order ever received by the South Korean shipbuilders went to HD Hyundai in October 2023 for 17 LNG carriers valued at $3.9 billion and providing work for HD Hyundai till 2029.

The closing of the order by SHI was the next step in QatarEnergy’s long-term expansion program tied to the development of the new North Field. In the first phase of the program, QatarEnergy was linked to 60 LNG carrier orders. The second phase began with the 17 to be built by HD Hyundai and was followed in January by an order for six of the world’s largest LNG carriers to be built in China. Hanwha Ocean is believed to be finalizing the next order which will also involve 15 ships. Rumors in Korea are that this order will be finalized by March.

SHI highlights that with the new order, it has booked 17 ships in the first weeks of 2024 with a value of $3.7 billion, which is nearly half of its entire orderbook for 2023. Last year, SHI booked orders valued at $8.3 billion falling short of its annual target. Despite that, company officials are highlighting that they now have a backlog of 90 LNG carriers.

Rival HD Korea Shipbuilding & Offshore Engineering reports that its operation is off to an even stronger start to 2024 which may cause the company to raise its forecast for the year. In the first weeks of the year, the shipbuilding holding company reports its three shipbuilders have booked a third of its annual forecast. They have contracted 38 ships with a total value of $4.65 billion with the annual target set at $13.5 billion. 

The holding company had lowered its forecast for 2024 versus 2023 citing economic concerns and the outlook for the shipping industry. Last year, the company’s target was $15.7 billion but on the strength of the industry, they ended the year with $22.3 billion in orders including the QatarEnergy mega order. 

HD KSOE highlights that the new segment for large ammonia carriers is contributing to its growth in 2024. Since 2021, the company has booked orders for 74 large gas carriers, including LPG and ammonia, which is 56 percent of the global market. Since January, the company has booked orders for 11 ammonia carriers. 

The strength of the market permitted KSOE to swing to a profit for the full year 2023. The company reported today that it had a net profit for the year of $109 million versus a loss of over $222 million in 2022. Full-year revenues were up more than 23 percent. 

Despite the strong year, KSOE reported a fourth-quarter net loss of $67 million. The company however had an operating profit of $121 million and a sales increase of more than 21 percent. KSOE is the holding company for three shipyards and other operating companies. One of the shipyards, HD Hyundai Heavy Industries however reported a profit for the fourth quarter. It had a net income of $23 million in the quarter versus a loss of $121 million in Q4 2023. Operating profit at the shipyard was up more than 500 percent on a 27 percent increase in revenues.

Samsung Heavy Industries highlighted the improving financial picture for its operations and the industry predicted that “an orientation towards profitability in selecting orders will gain momentum.” Earlier in the year, media reports suggested that Hanwha Ocean was stopping future containership orders to focus on the more profitable market segments, but the company denied those reports.