Samsung Heavy Industries' Q3 operating profit rises 42%; FLNG orders set to fuel further growth

[Financial News] Samsung Heavy Industries' operating profit rose 42% year on year in the third quarter. In addition to boosting revenue with high-priced orders, the company is driving growth with major orders for floating liquefied natural gas (FLNG) facilities.
Samsung Heavy Industries on the 29th released preliminary third-quarter results showing revenue of 3.1504 trillion won and operating profit of 338.4 billion won. Revenue was up 20% and operating profit up 42% from the same period a year earlier. Cumulative revenue for the first three quarters was about 9.3 trillion won, with operating profit at 936.5 billion won. Operating profit has already exceeded last year's 862.2 billion won, and is expected to reach the 1-trillion-won range this year.
Typically, revenue falls in the third quarter as summer vacations and the Chuseok holiday reduce the number of working days in the shipbuilding industry. Samsung Heavy Industries' profitability has nevertheless remained solid, thanks to revenue from high-value-added vessels and major FLNG orders. Specifically, the company has secured orders this year for a total of 48 vessels, including 20 LNG carriers and two FLNG units, worth $12.4 billion, or more than 16 trillion won. It has achieved 89% of its annual order target of $13.9 billion.
Growth is also expected to remain strong in the fourth quarter and beyond. Demand for LNG carriers, the company's mainstay, is unlikely to ease soon as LNG cargo volumes continue to rise. The company has also reinforced its position in the LNG carrier market by securing orders for four large carriers with cargo tank capacity of 200,000 cubic meters—26,000 cubic meters more than the standard type.
Expectations for additional FLNG orders by year-end are particularly strong. These include the second Delfin FLNG in the United States and Western FLNG in Canada. New FLNG projects are also expected to move forward next year in Africa, Latin America and North America.
Samsung Heavy Industries is working hard to secure further orders. One notable example is its in-house development of an FLNG liquefaction system, an area that had been heavily dependent on overseas suppliers. The system received design certification from the American Bureau of Shipping and Lloyd's Register. Building on this, the company is strengthening cooperation with U.S. companies. It signed a technical services agreement (PSA) with JERA Americas, a subsidiary of JERA, Japan's largest power company, for a floating LNG storage and regasification unit (FSRU) project off the coast of Hawaii. It also plans to target the FLNG market in five regions around the world with LNG developer Fulcrum LNG.
A Samsung Heavy Industries official said, “We will further solidify the foundation for qualitative growth, centered on high-value-added product groups with unrivaled technological competitiveness, such as LNG carriers and FLNGs.”

[email protected] Kim Yun-ho Reporter