South Korean shipbuilder Hyundai Heavy Industries (HHI) has set its order target at USD 19.5 billion in 2016, compared to last year’s target of almost USD 23 billion.

The company experienced a bumpy year, as it was hit by significant losses following contract cancellation of a semi-submersible rig and massive losses in the offshore business.

“New orders bagged on relaxed payment terms and cheaper pricing have taken their toll on the shipbuilding, offshore and industrial plant business division. Other divisions, namely engine & machinery, electro-electric systems and construction equipment, have suffered as well: the work has reduced by 20-30%, and several construction equipment shops have even halted operations,” HHI’s President & CEO Kwon Oh-gap said.

Due to the decline in newbuilding orders and a downturn in the offshore oil and gas industry, HHI’s CEOs relinquished their salaries in November.

Furthermore, the company recently made an agreement with its workers to freeze the base pay of yard employees and distribute a 100 percent bonus increase, plus an additional USD 1,283 (KRW 1.5 million).

The rigorous cost-cutting is expected to return HHI to profitability in 2016.

“If we remain in the red this year however, the market will no longer wait for us,” he added in his new year’s address.

World Maritime News Staff