Samsung Heavy Industries CFO Bae Jin-han has announced through in-house broadcasting that the company could suffer capital impairment and also hinted at the possibility of a major personnel restructuring and a walkout if the deficit continues, reports koreatimes.
Severity of the Financial Situation
The company says the comments were made to emphasize the severity of the financial situation to company management as the company has recorded six years of deficit consecutively.
According to the industry, the announcement was made on April 5 during a management briefing, with the CFO stating, “If the performance continues through the second quarter next year we could suffer impaired capital and a possible walkout.”
Cut to Improve Company Operations
He also added that 30 percent of the workforce could be cut to improve company operations if the current situation continues, stating “three people need to quit for the remaining seven employees to survive.”
“The CFO was trying to explain the continuous deficit the company has incurred over the years and I believe the words came in the heat of the moment,” a Samsung Heavy official said. “It does not mean it’s the current company situation but a word of encouragement to better recover from the crisis was taken out of context.”
Emphasize Capital Impairment
However, industry watchers say that for a CFO to emphasize capital impairment and the possibility of a walkout holds substantial meaning in itself.
Unlike other shipbuilding companies such as Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering, Samsung Heavy has incurred continuous deficits over the years as the drop in oil price has impacted orders for drill ships and last-minute contract cancellations have left the company with five drill ships in its inventory.
Samsung Heavy has incurred continuous losses over the years. In both 2019 and 2020 the company suffered over 1 trillion won in net losses.
Large-Scale Procurements
Starting this year, there have been large-scale procurements and some believe the company could start to recover from the financial crisis. The company has already procured 42 ships this year worth $5.1 billion which is 65 percent of the $7.8 billion sales goal this year.
Last month alone has procured 20 container ships worth 2.8 trillion won.
Last week, Samsung Heavy completed a pilot test for its liquefied natural gas (LNG) regasification system.
First LNG Regasification System
According to the company, the S-REGAS system is the world’s first LNG regasification system.
An LNG storage regasification unit (LNG FSRU) combines cold power-generation technologies.
The LNG FSRU is a ship that provides natural gas to consumers after vaporizing natural gas offshore.
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Source: koreatimes
