Samsung Heavy Industries posts 42% jump in Q3 operating profit

Sales reach 3.15 trillion won, up 20%

Profitability holds firm despite fewer working days

High-value vessel deliveries drive earnings improvement

Order backlog at 89% of annual target after 20 LNG carriers secured

Large FLNG awards in Q4 seen as key to hitting full-year goal

A very large gas carrier (VLGC) built by Samsung Heavy Industries. [Samsung Heavy Industries]

Samsung Heavy Industries said Thursday its third-quarter sales reached 3.15 trillion won ($2.36 billion) and operating profit came in at 338.4 billion won, based on preliminary results.

Sales rose 20 percent from a year earlier and operating profit jumped 42 percent. Pre-tax profit surged to 610.7 billion won, boosted by 272.3 billion won in non-operating income that included gains from the settlement of forward exchange contracts.

Despite a reduced number of working days in the third quarter due to seasonal factors — summer vacations and the Chuseok holiday — the company maintained a solid operating profit margin of 10.7 percent. Samsung Heavy Industries attributed the result to the full-scale recognition of revenue from high-value vessels.

On a cumulative basis through the first three quarters, sales reached about 9.3 trillion won and operating profit totaled 936.5 billion won. "Hitting the full-year sales guidance of 12.8 trillion won looks well within reach," a company official said.

A large floating LNG production facility (FLNG) built by Samsung Heavy Industries. [Samsung Heavy Industries]

Samsung Heavy Industries has secured orders for a total of 48 vessels worth $12.4 billion so far this year — including 20 LNG carriers and two floating LNG production facilities — reaching 89 percent of its full-year order target of $13.9 billion. The company is targeting additional large offshore project awards before year-end, including a second Delfin FLNG unit from the United States and the Western FLNG project in Canada.

The outlook for the shipbuilding and offshore market remains broadly positive. Despite uncertainty in the global economic environment, long-term demand for LNG carriers is expected to stay robust on the back of rising LNG trade volumes. Container vessel orders are also anticipated to pick up as shipping lines restructure their fleets and replace older ships with eco-friendly vessels.

In the offshore segment, new FLNG projects are expected to continue as Africa, Latin America and North America emerge as new sources of demand.

"The trend of quarter-on-quarter earnings improvement has been sustained throughout this year," a Samsung Heavy Industries official said. "We will further solidify the foundation for quality growth, centered on high-value product lines."

keg@heraldcorp.com