In a major move that has opened up the doors to a number of deals in the shipbuilding industry, Hyundai Heavy Industries Co. on Wednesday split into four entities, with the combined market value amounting to US$14.8 billion. The second-largest shipbuilder in the world, Hyundai Heavy’s move is driven by its attempt to save all of its divisions from a financial crisis.
The shipping conglomerate has divided its operations into electric machinery, shipbuilding and offshore projects, industrial robots, and construction equipment. Apart from Hyundai Heavy, the other three companies that have formed after the dismantling are Hyundai Construction Equipment Co., Hyundai Electric & Energy Systems Co., and Hyundai Robotics Co. Paul Choi of CLSA Securities Korea Ltd. stated that each of the units have been listed individually.
South Korea’s Flailing Shipbuilding Industry on Restructuring Spree
Hyundai Heavy, based in Ulsan, South Korea, is one of the many other companies who have been resorting to major restructuring activities as the shipbuilding sector in the country struggles to stay afloat. The nation is presently home to three of the world’s top vessel manufacturers – Daewoo Shipbuilding & Marine Engineering Co., Hyundai Heavy, and Samsung Heavy Industries.
In the past three years, clients have been limiting their expense on offshore projects and this resulted in plummeting crude oil prices and overcapacity. Consequently, the company sold its assets on the back of declining orders and cut over 20,000 jobs.
Daewoo managed to avert a major payment crisis last month after the company was bailed out by bondholders. The company is considered to be largest shipbuilder, in terms of orderbook.