S. Korean shipbuilders launch new businesses amid falling orders

SEOUL, Nov. 26 (Yonhap) -- South Korean shipbuilders are moving to diversify
their business portfolios as their orders decline due to a global economic
recession, industry sources said Wednesday.

Orders to South Korean shipyards have surged over the past few years, but demand
for new vessels has weakened since the third quarter of this year as worldwide
financial turmoil has eroded sales of commodities and consumer goods.
"It is difficult for shipbuilders to respond to a declining industry cycle," said
Cho Young-joon, a researcher at Shinyoung Securities. "They are launching new
businesses to secure a stable revenue source."
Shipbuilding-related sales at Hyundai Heavy Industries Co., the world's leading
shipyard, accounted for 47 percent of its total sales in the third-quarter of
this year, with the remaining coming from engines, machinery and construction
equipment.
Armed with ample cash, Hyundai Heavy took over a brokerage house in July this
year as part of its efforts to diversify and reduce its dependence on
shipbuilding.
The country's leading shipyard also said in September it would invest 102 billion
won (US$67.6 billion) in a plant that makes wind power generators.
The company is already involved in a solar energy business project. It expects
its sales of solar cells and solar modules to reach 1 trillion won in 2010 on
rising demand for alternative energy.
Hyundai Heavy said last week that its shipbuilding orders sank 57 percent in
October from a year earlier to $325 million on falling demand. The company said
it has not received any new orders this month.
Samsung Heavy Industries Co., the world's second-largest shipyard, has followed
suit. It announced plans this week to develop offshore wind power-generating
facilities with a capacity of up to 5 megawatts.
Daewoo Shipbuilding & Marine Engineering Co., the world's No. 3 shipbuilder, is
actively engaged in a construction project. The shipbuilder recently signed a
memorandum of understanding with the government of Oman to develop an industrial
area there.
If finalized, the estimated at 15 trillion won deal will be the biggest overseas
contract ever won by a South Korean firm.
Daewoo Shipbuilding has established a joint venture shipping company with the
Nigerian National Petroleum Co. to carry crude oil.
"We will continue to venture into areas related to the shipbuilding sector to
diversify our business and secure stable revenue," said an official at Daewoo
Shipbuilding.
sam@yna.co.kr
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