SEOUL, KOREA - Samsung Heavy Industries said on April 25 that it posted 3,431.1 billion won in sales revenue for the first quarter, with operating loss and net loss at 362. 5 billion won and 272.4 billion won, respectively. The company's operating profit falls far short of the early market consensus of 210 billion won. The average estimates put out by analysts compiled by FnGuide were 3,594.9 billion won in sales revenue and 218.4 billion won in operating profit.

 

According to the company, the large operating profit in the first quarter was largely attributed to the 500-billion-won reserve fund charged for the quarter to prepare for losses in some offshore plant projects. The projects expected to take losses include the Ichthys central processing facility in Australia's northern coast and the floating production storage and offloading (FPSO) vessel in Egina, Nigeria.

 

The Australian project has had cost overruns due to spec changes in the middle of the detail design and follow-up process while the Nigerian project is expected a rise in production cost in the installation process. After looking into the projects, a Samsung Heavy Industries official said, the company had to charge the expected losses to the first-quarter results.

 

The official said, "Except the Ichthys and Egina projects, all other offshore projects are under way smoothly. As we reflected all expected losses in the first-quarter results, the performance will get better from the second quarter."

 

The same official added, "The sales revenue and pretax profit for the whole year will likely 14.6 trillion won and 200 billion won each. Given we are reflecting losses to the financial statements as conservative as possible, it is possible for the performance to be better than expected."