South Korea’s Hanwha Ocean Co. has not yet made any announcements of orders, even though two months have passed since Hanwha Group acquired Daewoo Shipbuilding & Marine Engineering Co. (DSME) in May.

Market insiders note that the weak performance is part of the shipbuilder’s shift toward a new strategy that focuses on orders of high-valued vessels.

According to sources from the shipbuilding industry on Tuesday, Hanwha Ocean has secured 5 orders, including those of 4 liquefied natural gas (LNG) carriers, for a total of $1.06 billion this year.

It accounts for only 15 percent of the company’s target of $7 billion for this year. What’s noticeable is that the shipbuilder has secured no order since the launch of Hanwha Ocean after DSME acquisition on May 23.

Other rivals such as HD Korea Shipbuilding & Offshore Engineering and Samsung Heavy Industries Co., in the meantime, are enjoying an industry boom.

HD Korea Shipbuilding & Offshore Engineering secured orders worth 2.85 trillion won ($2.2 billion) in July alone, which marks 93 percent of its annual target. As of July 14, Samsung Heavy Industries enjoyed a record order for 6 methanol-powered container ships for 3.95 trillion won.

The pause of orders for Hanwha Ocean has been described as part of its transition toward an approach of selective ordering to escape from the old-fashioned practice that focused on volume sales at a low margin of profit, according to market sources.

“Hanwha Ocean is bidding at higher prices compared with the rival HD Korea Shipbuilding & Offshore Engineering,” said an unnamed source from the industry.

Hanwha Ocean is believed to pause its bidding activity as it has been preparing to compete for significant ship projects planned for the second half of the year.

Among the projects is the 12 trillion won LNG carrier initiative that will be commissioned by Qatar‘s national oil company Qatar Energy.

“Hanwha Ocean is undergoing a transitional phase as it establishes its new ordering approach,” said Kang Kyung-tae, an analyst at Korea Investment & Securities. Co.

“Instead of expecting an immediate dramatic turnaround after joining Hanwha Group, the focus is on performance following the implementation of a synergy strategy in the second half of the year.”

However, concerns persist as the shipbuilding industry thrives, and Hanwha Ocean struggles to turn its business into a profitable venture. The widening gap between its order book and that of its competitors is also raising eyebrows.

By Oh Soo-hyun, Kim Hee-soo, and Han Yubin

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