Hyundai Heavy Industries will continue to incur losses in 2016, after having an annual loss of US$1.14 billion in 2015. The loss was due to cost reevaluations for all offshore projects after checking problems with the Al-Nasr field development in Abu Dhabi. Said projects however are close to completion. The extremely low prices of oil have also reduced the demand for offshore plants. Oil majors have begun to put in new investments on newer oil fields.
HHI is also not expected to make returns in the near future, although additional losses in 2016 should be below 2015 levels. The Jeddah South Terminal Power Plant and Shuqaiq Thermal Power Plant will continue until they create smooth performances due to commissioning after their completion. They are expected to be completed in 2017.
Indeed it was a tough year for the world’s largest shipbuilder with the unfavorable market conditions and global economic downturn. It suffered losses from the cancellation of semi-submersible rigs, delivery delays of offshore projects, and increased man hours. They also remained in deficit due to losing provision for an offshore project as well as a one-off maintaining cost for drillships they delivered.
In the third quarter of 2015, HHI still reported a net income that was twice the analysts’ estimates. The net income posted was at $47 million or 53.7 billion won, versus analysts’ projection at 22.2 billion-won average.
One HHI officer stated that they laid the groundwork for a turnaround in 2016. They have a series of comprehensive restructuring measures. Some of these measures include liquidating unprofitable overseas subsidiaries and launching a human resource efficiency enhancement program to shoring up their finances, which they believe is possible by selling off stock assets.
It is good to see that despite the losses they are committed to increase their profits for 2016. They plan on implementing stricter cost cutting measures and stabilizing manufacturing processes.