Samsung Heavy sees rise in net profit.
HIGHER prices and improved productivity throughout last year led Samsung Heavy Industries, the world"s third largest shipbuilder, to post a 6.8% rise in net profit to Won669bn ($575m) last year, compared with Won627bn a year earlier.
Total revenue climbed 22.8% to Won13.09trn, up from Won10.7trn in 2008, while operating income rose 5.1% to Won793bn against Won755.3bn.
Observers said the higher prices reflected the prices agreed when ships were ordered compared with lower shipbuilding prices now.
But they also expressed alarm at Samsung Heavy"s fourth-quarter results ?which were a bit disappointing even when considering the year-end bonus payment? that was estimated at about Won100bn, said one Seoul-based analyst.
Samsung Heavy said that while net profit rose 19% to Won193bn in the fourth quarter of last year compared with the same period in 2008, operating profit dropped to Won142.8bn, down from Won196.6bn a year earlier.
The quarter-on-quarter figures were even worse, analysts said. Operating profit dropped 47% in the fourth quarter compared with the third quarter.
Operating revenue was down 4% to Won3.47trn in the fourth quarter compared with July to September ?which reflected the industry trend of slowing production volume in reaction to delivery delays?, one analyst said.
He added that while the drop was in line with consensus forecasts, the 4.1% operating margin in the fourth quarter was less than half the consensus estimate of 8.4%, although it reflected the payment of the year-end bonus. ?Stripping out this one-off expense results in a 7% operating margin,? the analyst said.
Samsung Heavy said its performance in the fourth quarter was hurt by high prices for steel plate used in shipbuilding and its employee bonus scheme.
The analyst said: ?We are admittedly less optimistic for 2010 estimated earnings than we were before the results announcement. Management guidance for flat top line revenue and year-on-year improvement in operating margin from last year's 6.1% is well beneath consensus expectations.?
Samsung Heavy saw its share price slide 1.9% to close at Won25,200 before the results were released after the market closed.