South Korea’s Hanwha Ocean is reorganizing its production capabilities as the yard aims to set new delivery records for the number of LNG carriers built. The changes to production are part of the long-term plan of the new owners and management of the former Daewoo Shipbuilding & Marine Engineering (DSME) to expand the profitability of the operations in commercial shipping as they also target new work for different navies.
The shipyard reports that its 2024 production plan calls for the delivery of 22 LNG carriers, which would be a new record for annual deliveries within the category. It is especially significant as these are the highest-value ships built by the yard, and under management’s plan, they expect to continue to grow output to deliver 24 LNG carriers in 2025. By comparison, they highlight the previous record set by DSME was 19 LNG carriers delivered in 2018.
Hanwha Ocean says its first dock is the world’s largest used for new ship construction. It measures approximately 1,739 feet in length and 430 feet in length and DSME used it to build a broad range of ships. Demonstrating the size of the dock, the company highlights that four LNG carriers are currently being built side-by-side in the dock with plans for their upcoming simultaneous launch.
The company however reported in a stock exchange filing on October 30 that it is currently running behind schedule on an order placed in 2021. The report says that the contract date is being reset to March 15, 2024, without stating the reasons. DSME, however, had warned in 2022 that a 51-day strike at the yard was impacting production schedules and there were reports of additional slowdowns as the recapitalization was taking place in late 2022. Hanwha completed its investment in the company in May 2023.
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Starting next year, Hanwha Ocean plans to also begin building LNG carriers in the yard’s second dock. Using the two docks simultaneously and focusing on LNG carriers they expect to expand output in the category and contribute to the financial performance of the company.
Currently, the company’s backlog in its orderbook represents three years of stable work. As of the end of the third quarter, they had orders for 65 LNG carriers and a total of 99 vessels. In addition, management reports that a large order of LNG carriers is scheduled to be placed by QatarEnergy in the near future as part of the company’s record slot reservations placed with South Korea’s three top yards in 2020.
Hanwha remains optimistic about its new shipbuilding operation after reporting that the former DSME achieved its first operating profit during the most recent quarter. It was the first time in 12 quarters. DSME had been posting mounting losses since the fourth quarter of 2020. Hanwha Ocean reported sales in the most recent quarter of $1.4 billion helping it to achieve an operating profit of $55 million.
They expect to enhance profitability with the new shipbuilding strategy of expanding LNG production. In addition, the company is reported to be pursuing additional opportunities for naval shipbuilding while also working on new technologies for future ship designs and enhanced production capabilities.