Samsung Heavy Industries, boosted by an expanded backlog of high-value-added ships and offshore plants last year, surpassed 860 billion won in annual operating profit for the first time in 12 years. Revenue also returned to the "1 trillion won club" for the first time in nine years since 2016. Samsung Heavy Industries plans to extend its growth trend this year by increasing orders in offshore plants, one of its strengths.
◇ Operating profit beats in-house guidance by 37%
On the 30th, Samsung Heavy Industries said that on a consolidation basis last year, it posted revenue of 10.65 trillion won and operating profit of 862.2 billion won. Revenue rose 7.5% from a year earlier, and operating profit increased 71.5%. It is the first time in 12 years since 2013 (914.2 billion won) that annual operating profit has exceeded the 800 billion won range. Net profit came to 535.8 billion won, an 894.1% surge from the prior year (53.9 billion won).
The results slightly missed the recently raised market consensus (revenue of 10.727 trillion won, operating profit of 873.9 billion won) but beat Samsung Heavy Industries' in-house guidance of 10.5 trillion won in revenue and 630 billion won in operating profit. Versus guidance, revenue was higher by 1.4% and operating profit by 36.9%.
◇ "Focus on money-making ships"… offshore projects revived
The sharp improvement was driven by a business structure centered on profitability. Last year, Samsung Heavy Industries cleared low-margin container ship volumes and reshaped its revenue mix around high-price, high-margin liquefied natural gas (LNG) carriers and floating liquefied natural gas production facilities (FLNG).
At Samsung Heavy Industries' Geoje shipyard, production is underway on three FLNG units: Malaysia's ZLNG, Canada's Cedar, and Mozambique's Coral projects. As offshore project construction volumes ramped up in earnest, revenue expanded and fixed-cost burdens eased, analysts said. In addition, a newbuild FLNG order contract with U.S.-based Delfin is also imminent.
According to IBK Securities, in the fourth quarter last year, ships ordered since 2023 with high profitability accounted for as much as 60% of Samsung Heavy Industries' merchant ship revenue. On that basis, Samsung Heavy Industries posted fourth-quarter operating profit of 296.2 billion won and revenue of 2.8379 trillion won. Operating profit rose 70% from a year earlier, while revenue increased 5.1%.
◇ This year's revenue target set at 12.8 trillion won… order target raised 42%
Samsung Heavy Industries plans to maintain an order strategy focused on profitability this year as well. The company on this day presented a revenue outlook of 12.8 trillion won for this year, up 20% from last year's results. The order target is $13.9 billion (about 20 trillion won), up 41.8% from last year's target of $9.8 billion (about 14 trillion won). A Samsung Heavy Industries official said, "As we fully roll out our global operation strategy this year using partner shipyards at home and abroad, production volume will grow and revenue improvement will be bigger."
New business opportunities, including U.S. naval programs, are also taking shape. Han Seung-han, an analyst at SK Securities, said, "Samsung Heavy Industries is also strengthening partnerships to enter the U.S. Navy ship MRO (maintenance, repair and overhaul) business, opening the door to new business opportunities." On this, Samsung Heavy Industries said, "This year, we expect visible results to be generated in business cooperation with U.S. shipyards and MASCAR."
The market expects Samsung Heavy Industries' profitability improvement to continue this year. Jeong Yeon-seung, an analyst at NH Investment & Securities, said, "Ship prices will keep rising due to a shortage of LNG carriers, and FLNG profitability will remain strong," adding, "Beyond a simple industry rebound, results are expected to grow centered on high-profit ships."