Hanwha Ocean’s operating profit for the first quarter (January–March) was tallied at KRW 441.1 billion, a 71% increase compared with the same period last year. With HD Korea Shipbuilding & Offshore Engineering (HD Hyundai’s intermediate holding company for the shipbuilding division) and Samsung Heavy Industries also winning a series of high value-added shipbuilding projects in the first quarter, there is an optimistic outlook that the combined first-quarter operating profit of the three major Korean shipbuilders will approach KRW 2 trillion.

Hanwha Ocean announced on the 27th via a regulatory filing that it posted first-quarter sales of KRW 3.2099 trillion and operating profit of KRW 441.1 billion. While sales grew only 2% year-on-year, operating profit exceeded the investment market consensus (approximately KRW 375 billion) by more than 17%.

Earnings of shipbuilders that have not yet released their results are also expected to increase significantly from last year. HD Korea Shipbuilding & Offshore Engineering, which recorded sales of KRW 6.7717 trillion and operating profit of KRW 859.1 billion in the first quarter of last year, is projected to achieve first-quarter sales in the KRW 8 trillion range and operating profit in the KRW 1.18 trillion range this year. Samsung Heavy Industries is likewise expected to see its first-quarter sales in the KRW 2.98 trillion range and operating profit in the KRW 340 billion range, an improvement of about 37% from last year. The combined actual and projected operating profits of the three companies come close to KRW 2 trillion.

Paradoxically, the ‘Middle East war’ lies behind this shipbuilding boom. As countries around the world move to diversify their energy supply chains, orders for LNG carriers (LNGC) and very large crude carriers (VLCC) have surged. According to global ship data providers Clarksons Research and Riviera, global VLCC orders in the first quarter of this year totaled 64 vessels, 21 times higher than in the same period last year (3 vessels). LNGC orders also increased from 9 vessels in the first quarter of last year to 33 vessels this year.

Analysts say Korean shipbuilders are enjoying a boom as ship orders have risen sharply in a short period. In fact, HD Korea Shipbuilding & Offshore Engineering has won orders for 10 LNGCs so far this year, 2.5 times more than in the first quarter of last year. Hanwha Ocean, which secured orders for 3 VLCCs and 2 LNGCs in the first quarter of last year, has already booked orders for 7 VLCCs and 4 LNGCs this year, while Samsung Heavy Industries, which had only one LNGC order in the first quarter of last year, has received orders for 6 LNGCs this year.

The shipbuilding industry expects this ordering trend to continue for some time. A Hanwha Ocean representative stated, “Orders for high-margin commercial vessels have driven the improvement in earnings,” adding, “As high-priced commercial vessel projects begin to be reflected in sales, profitability is expected to continue to improve.”

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