By Lee Hyo-sik
Daewoo Shipbuilding & Marine Engineering (DSME) will dispose of non-core, loss-making affiliates to focus on shipbuilding and offshore plant construction businesses, company officials said Friday.
The shipbuilder has 10 affiliates and plans to unload up to six to raise funds.
The company said it would overhaul its organizational structure to become a more efficient and agile entity as it has struggled with fierce competition for contracts amid a sluggish global market.
These moves have been spearheaded by new company CEO Jung Sung-leep, who officially took the helm of Korea’s third-largest shipbuilder on Friday.
In an inaugural speech, Jung said DSME will spend its resources on core businesses, stressing that it will focus on building commercial vessels and offshore plants.
“Besides our core units, we will dispose of all other businesses,” Jung said. “We will keep the costs of doing business down. I think the company has been unnecessarily overspending on its operations. I will do my best to overhaul the firm’s current high-cost, low-efficient business structure.”
A DSME spokesman said the shipbuilder has not yet drawn up the list of affiliates subject to disposal.
“The new CEO wants to sell non-core, money-losing company affiliates,” the spokesman said. “But we have not decided yet who will be subject to the sale.”
During the boom period, DSME diversified its business portfolios, but has decided to focus on core businesses to better cope with the continuing global industry slump.
The company is also expected to unveil emergency measures in June to cut costs and improve its financial health.
According to industry sources, DSME will first dispose of three affiliates: DSME Construction, DeWind and Future Leadership Center (FLC). DeWind is a U.S.-based wind-power company and FLC operates Sunning Point Country Club in Yongin, Gyeonggi Province, and DSME’s training center nearby.
The company is also reportedly considering DSME Trenton, a wind-power generation joint venture in Canada; Daewoo Mangalia Heavy Industries, DSME’s subsidiary in Romania; and DSME Shandong, a shipyard in Shandong, China.
These foreign subsidiaries have been losing money over the past few years, hit by a sluggish global market.