Feb. 2 (Bloomberg) -- Hyundai Heavy Industries Co., the world’s largest shipbuilder, reported a 91 percent decline in fourth-quarter profit as it completed orders won at reduced prices during the global financial crisis.
Net income fell to 71.3 billion won ($64 million) from a restated 826.7 billion won a year earlier, the Ulsan, South Korea-based company said today in regulatory filing based on parent figures. Sales rose 5.1 percent to 6.75 trillion won.
Ship priced tumbled in 2009 because of competition from yards in China and a slowdown in global orders caused by tighter credit and slumping trade. Hyundai Heavy has now pared its reliance on making ships and is instead focusing on more sophisticated and profitable products used by energy companies.
“There’s going to be more orders for offshore products this year and Hyundai Heavy will be the one to benefit,” said Hur Sung Duck, an analyst at HI Investment & Securities Co. in Seoul. “Meanwhile, it’s going to be a dry period for ship orders.”
Operating profit, or sales minus the cost of goods sold and administrative expenses, fell 62 percent to 404.6 billion won. Margin to sales narrowed to 6 percent from 17 percent a year earlier.
The shipyard gained 1.1 percent to close at 317,500 won in Seoul trading before the earnings announcement. The stock has dropped 35 percent in the past year, compared with a 4.2 percent decline for South Korea’s benchmark Kospi index.
Hyundai Heavy will pay shareholders a dividend of 4,000 won a share, the company said in separate filing.
Smaller contributions from non-shipbuilding businesses, including plant construction and renewable energy, also caused profit to fall, Hyundai Heavy said, without disclosing figures and details. The company will release consolidated figures, which include earnings at affiliates, later this month.
The shipbuilder said Jan. 2 that it is targeting orders worth $30.6 billion for ships, offshore products and plant constructions this year. That’s 21 percent more than the $25.3 billion it got in 2011. Sales may rise 10 percent to 27.6 trillion won.
The company won orders for a record 11 drill ships last year as oil companies increase exploration amid a rise in oil prices and depleting reserves at existing fields. It also is building a gas-processing facility for Chevron Corp.’s Gorgon project in Australia.
The shipyard’s orders for oil tankers, container ships and dry-bulk vessels halved to 23 last year because of competition from China and a drop in global orders caused by a capacity glut.
The worldwide order backlog fell 26 percent in 2011, the biggest decline since Clarkson Plc, the world’s biggest shipbroker, began compiling data in 1995.
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