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Dockyards Earnings Drop Daewoo Shipbuilding & Marine Engineering Company, say second-quarter profit fell 21 percent, leading an earnings slump at dockyards in the world's largest shipbuilding country, because of rising steel prices. The price of steel plates, about 18 percent of a shipbuilder's costs, rose as much as 70 percent this year, driven higher by demand from China. A 30 percent increase in the price of steel lowers operating profit margins by an average 4.5 percentage points, said Song Yung Sun, an analyst at Seoul-based Korea Investment Trust Management Co. "Second-quarter profits won't be as good as last year because raw material costs rose more than expected,'' Song said. Rising raw material costs come as shipyards complete orders they received in 2001 and 2002, when ship prices were at 10-year lows. The price for very large crude oil carriers, an industry benchmark, fell to $62.5 million in 2002, according to data by London-based Clarkson Plc, the world's largest ship broker. Shipbuilders are paid progessively as vessels are completed. ``Steel plate prices will likely continue to rise and will have a negative affect on shipbuilders' earnings,'' said Lee Ju An, who manages the equivalent of $343 million at Daehan Investment Trust Management Co., including Hyundai Heavy shares. Who Are We ? | About THISDAYOnLine.com | THISDAY People | Contact Us © Copyright 2000 Leaders & Company Limited

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