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LNG carriers and offshore projects keep Samsung Heavy profitable

By focusing on the sale of higher-margin products, such as LNG carriers and floating LNG facilities, SHI achieved its seventh-consecutive quarter of profitability

In the fourth quarter, the company aims to secure orders for environmentally friendly containerships and other projects to meet its full-year forecast of Won9.7trn in sales and Won400bn in operating profit

SAMSUNG Heavy Industries has posted consecutive quarters of profitability, driven by the expansion of high-value-added ships, despite seasonal factors that reduced the number of working days.

In a stock exchange filing, SHI reported an operating profit of Won119bn ($87m) for the third quarter, a 58% increase from the corresponding period last year. This marks the shipbuilder’s seventh-consecutive profitable quarter, following its return to profitability in the first quarter of last year, after 22 quarters of losses.

The company attributed its consistent profitability to the growth in high-margin vessels, such as LNG carriers and floating LNG units.

Total sales for the quarter reached Won2.3trn, up 15% year on year. However, both operating profit and sales decreased by 8% compared with the previous quarter.

SHI explained the decline was due to a reduction in working days caused by seasonal factors, including summer holidays and the South Korean Thanksgiving holiday.

Despite this, the operating profit margin for the third quarter remained steady at 5.2%, similar to the previous quarter.

So far in 2024, SHI has secured orders for 24 vessels valued at $5.4bn, including 21 LNG carriers, two very large ammonia carriers and one shuttle tanker. This accounts for 56% of its annual order target of $9.7bn, which includes $7.2bn for commercial vessels and $2.5bn for offshore engineering.

The company expressed confidence in meeting its full-year target, as it is in negotiations for several projects, including environmentally friendly containerships, LNG carriers and FLNG units.

SHI stated: “For the remainder of the year, we will continue to selectively take orders, focusing on high-value-added vessels.”

Shinyoung Securities analyst Um Kyung-Ah expects SHI to meet its full-year guidance of Won9.7trn in sales and Won400bn in operating profit.

She also forecasts that the average price for LNG carrier deliveries next year will rise by more than 5%, leading to a 4.6% increase in full-year sales to Won10.1trn and a 60.2% rise in operating profit to Won757bn in 2024.

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