SEOUL – The world's top two shipbuilders Monday posted sharp declines in their second-quarter net profit, bled by the heavy discounts they have offered since 2009 to prop up sales in the aftermath of the global financial crisis. Shipbuilders typically book a large part of payments for vessels right before delivery, and the outlook for South Korea's Hyundai Heavy Industries Co. and Samsung Heavy Industries Co. continues to be bleak through early 2013 as they deliver low-priced ships, orders which they booked two to three years earlier. Hyundai Heavy has also revised downward its order and sales target for the year, reflecting the slowdown in trade as the global economy remains fragile. Hyundai Heavy, the world's largest shipbuilder by sales, posted a 83 percent slump in its second-quarter net profit, hit not only by lower prices for vessels but also reduced shareholding gains from affiliates including Hyundai Oilbank. "Most ships ordered at good prices before the 2008 financial crisis have been delivered and shipbuilders are now in the middle of delivering ships contracted years earlier at low prices," a company spokesman said by telephone. Consolidated net profit for the three months ended June 30 plunged to 134.1 billion Korean won ($119 million) from KRW787.5 billion a year earlier. The Ulsan-based shipbuilder posted a shareholding loss of KRW48.1 billion in the April-June quarter, shifting from an equity gain of KRW5.6 billion, the spokesman said. Hyundai Heavy recently revised down its annual order target to $29 billion from $30.552 billion, the person with direct knowledge of the matter said. In the January-June period, it achieved 28 percent of the target. It also revised down its sales target from KRW27.573 trillion for the year to KRW26.9 trillion, the person said. Most of Hyundai Heavy's seven business divisions - including vessel engines and construction equipment - suffered declines in industry-wide demand amid the global economic slowdown, the spokesman said. – Agencies
