Overseas operations of South Korea's cash-strapped shipyards struggled with massive debts last year amid a protracted slump in the global shipbuilding industry, industry data showed.
The combined debts of 34 overseas subsidiaries of the three major shipyards -- Daewoo Shipbuilding & Marine Engineering Co., Hyundai Heavy Industries Co. and Samsung Heavy Industries Co., reached 5.36 trillion won about (US$4.58 billion) last year, up 28.7% tallied in 2010, when the shipbuilding industry enjoyed its heyday, according to the data compiled by local market researcher Chaebul.com.
Daewoo Shipbuilding's overseas businesses posted 2.18 trillion won in debt, up 43.2% over the five-year period, while Samsung Heavy saw the figure nearly triple to 1.26 trillion won. Debts of Hyundai Heavy subsidiaries, on the other hand, fell 13.4% to 1.91 trillion won, according to South Korea's (Yonhap) News Agency.
As a result, their debt ratio reached an average 548.9% last year, compared with 266.1% recorded five years earlier. The latest findings showed nearly 50% of the 34 overseas affiliates posted a debt ratio of more than 200%.
The debt ratio of Hyundai Heavy's Vietnam unit soared to 6,250% last year, while the Nigerian unit of Samsung Heavy registered a debt ratio of a staggering 3,234.3%.
Loss-making South Korean shipyards are undergoing creditor-led debt-restructuring with rising pressure from the government. They are ratcheting up moves to reduce their workforces and sell noncore assets in order to lower costs.
The shipbuilding industry, once regarded as the backbone of the country's economic growth and job creation, has been reeling from mounting losses caused by an industrywide slump and increased costs