Pan Ocean’s business transformation gathers pace ... Will LNG and tankers account for more than half for the first time this year?

[Financial News] Pan Ocean, which has earned most of its profits from bulk shipping carrying iron ore, coal and grain, is expected to generate at least half of its annual operating profit from LNG and tanker businesses for the first time this year. The shift away from a business model heavily dependent on the bulk shipping market, as the company builds gas and oil transportation into another earnings pillar, is seen as making its move toward a more stable business mix increasingly evident.
According to industry sources on the 11th, Pan Ocean’s LNG and tanker businesses posted combined operating profit of 168.7 billion won in the first half of this year, accounting for 50.4% of total operating profit of 334.6 billion won. The company earned 96.9 billion won from LNG carriers and 71.8 billion won from tankers. Operating profit from its bulk business, which transports iron ore, coal and grain in large quantities without packaging, was 139.4 billion won, just 41.7% of the total.
Until several years ago, bulk shipping overwhelmingly dominated Pan Ocean’s business structure. In 2021, bulk operating profit was 514.6 billion won, nearly 90% of the total 572.9 billion won. The company’s results were inevitably affected by fluctuations in demand for shipping steelmaking materials and coal for power generation, as well as changes in freight rates.
But as the company developed energy transportation into a new growth pillar, bulk’s share of profits declined to 68.4% in 2022, 62.6% in 2023 and 57.8% in 2024. Last year, the LNG and tanker businesses earned more than bulk shipping. Bulk accounted for 44.1% of total operating profit, while LNG and tankers combined accounted for 46.1%, surpassing bulk.
The effects of business diversification were also reflected in the company’s results. Last year, operating profit from the LNG division rose nearly fourfold, from 37.5 billion won the previous year to 148.9 billion won. Despite a decline in bulk earnings, overall operating profit increased on the strength of LNG growth. Tankers added to growth this year. First-half operating profit in the tanker division was 71.8 billion won, up 97.8% from 36.3 billion won in the same period a year earlier. That was 92.4% of the division’s full-year operating profit of 77.7 billion won last year, achieved in just six months.
Pan Ocean is also stepping up efforts to secure vessels to expand its oil transportation business. In February, it signed a deal to acquire 10 very large crude carriers (VLCCs) from SK Shipping for about 973.7 billion won. The deal also transfers long-term transportation contracts with major domestic cargo owners linked to the vessels, reducing the burden of having to find new cargo to carry after acquiring the ships.
Last month, Pan Ocean disclosed a contract worth about 148.2 billion won to charter out one VLCC to Trafigura Maritime Logistics. The company also plans to add two newly built VLCCs next year.
The LNG and tanker businesses are expected to account for an even larger share of total earnings next year as the effects of tanker investments and long-term contracts add up. Analysts say gas and oil transportation will play a substantially greater role in Pan Ocean’s earnings structure, which has been focused on carrying iron ore and coal.

[email protected] Jeong Won-il Reporter