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Korea Report - October, 2016.

Korea’s Big3 all turned to the black for the third quarter of 2016, but it has been achieved by bone-cutting efforts in restructuring, with the fallen revenue.

HHI posted revenue of KW8.8391 tril and operating profit of KW321.8 bil, making surplus for 3 consecutive quarters this year. HMD posted operating profit around KW38.3 bil (approx. $33.56 mil), up by 46% on-year. But saw a decrease in its revenue to around KW926.5 bil, down by 32% on-year. SHI posted revenue of KW2.7778 tril (around $2.4 bil) and operating profit of KW8.4 bil. The revenue has increased by KW5.7 bil (2.1%) compared to KW 2.7208 tril posted in the second quarter and by KW341.4 bil (14%) against KW2.4364 tril seen in the third quarter of 2015. DSME is forecasted to post a revenue of KW3.1 tril while the operating profit will be around KW30-40 bil.

The Korean government will order more than 250 public vessels, including naval and military vessels, worth more than KW11 tril ($9.6 bil) by 2020 to help ailing local shipbuilders deal with the drying up of new orders. For the shipping industry, the government will give KW6.5 tril in fresh financing to help shippers secure new vessels. “The global shipbuilding industry is likely to recover from 2018. However, by 2020, orders will not reach the levels seen between 2011 and 2015,” the finance minister Yoo said at a ministers’ meeting in Seoul. Out of the KW11.2 tril, KW7.5 tril will be first spent on ordering 63 public vessels by 2018. The remaining KW3.7 tril will be financial support funds and capital for new ship orders. The government’s plan came as the two ailing sectors, shipbuilding and shipping, are undergoing corporate restructuring amid a global slump in demand. For the shipbuilding clustered regions along the southern coast, the government will inject KW1.7 tril through 2017 to help companies cope with the crisis. For the shipping industry, the government will double the size of a fund, which is designed to help secure new ships including bulk carriers and container ships, from the current KW1.3 tril to KW2.6 tril.

TOPICS.

SKorean government urged to take stronger actions against illegal Chinese fishing vessels (p.2)

President Park’s approval rating fallen to 17.3% on allegations with Choi Soon-sil gate (p.3)

SKorea developed a new 3-D printing technology that uses protein from silkworms (p.4)

Seven surprising things about Korea for foreigners (p.6)

Pyongyang fired its intermediate-range Musudan missile twice in failure (p.7)

Number of NKorean defectors shot up to 1,036 between this year (p.8)

IMF kept its economic growth forecast for SKorea unchanged at 2.7% in 2016 (p.9)

Fitch Ratings kept SKorea’s sovereign credit rating at “AA-” for 4 consecutive years (p.9)

The performance records of major chaebols in third quarter (p.12)

Samsung Electronics (SEC) halted the production of its Galaxy Note 7 (p.13)

Korea aims to be the first to unveil the next-generation network 5G (p.14)

SKorean prosecutors concluded its four-month probe into irregularities at Lotte Group (p.14)

“Choi Soon-sil gate” added growing fears of a crisis in the Korean economy (p.17)

SKorea's foreign exchange reserves totaled $375.17 bil as of end Oct (p.17)

BOK held its key interest rate unchanged at a record-low 1.25% (p.18)

Korea’s Big3 all turned to the black for the third quarter with fallen revenue (p.18)

Korean government took action to help local shipbuilders and shipping companies (p.18)

McKinsey report painted a gloomy picture for the Korean shipbuilding industry (p.19)

HHI group reshuffled president-level personnel (p.21)

A big debt-equity swap for DSME is planned within this year (p.22)

The Seoul bankruptcy court ruled to accept bids separate bid for STX O&S (p.23)

Hanjin’s Asia-USA shipping network is up for sale (p.24)

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