| Daewoo Shipbuilding & Marine Engineering (DSME), South Korea’s third biggest shipbuilder, thinks this year will be difficult in terms of winning new orders. This was revealed during a question-and-answer session with Samsung Securities. Samsung Securities analyst Han Young-soo noted that demand for new ships would likely come from the liquefied gas, oil tanker, and container sectors. Han said, “The firm foresees offshore orders stalling before resuming in 2H15, led by production facilities.' DSME targets full-year new orders of USD13 billion, and while not revealing the related mix, it did say liquefied gas carriers should be the primary constituent, with offshore orders to account for less than 40% of the total (in line with its industry outlook), which it sees as achievable, despite likely requiring significant effort. Having already taken 37 new orders last year, DSME may not have the capacity to accept as many new orders this year. Han said, “Shipowners seeking delivery before 2018 may be compelled to look elsewhere. The company is, nevertheless, confident in its technological competitiveness and ability to attract additional order following 2018 deliveries, with its plans, including raising annual LNG carrier construction capacity to 30 vessels by 2017.” IHS Maritime’s Sea-web.com data show DSME is scheduled to deliver four LNG carriers this year, nine LNG carriers in 2016, and 15 LNG carriers in 2017. Still, DSME is unlikely to gain earnings momentum before next year, which is when LNG carrier sales should expand meaningfully. Han explained, “LNG carriers generate the greatest profits for DSME, with repeated construction likely to boost margins further. DSME’s forecasts have such sales hitting roughly 10% of total sales this year before climbing to 22% in 2016 and 30% in 2017.” |