Debts deteriorate last year in Korean shipping firms

Vessel deliveries ordered before the currency crisis in 1997 - 98 and the Korean currency's depreciation have drastically dampened Korean overseas-going shipping firms' debt to equity ratios, even though they had outstanding sales last year.

The Maritime Logistics department at the Ministry of Maritime Affairs and Fisheries analyzed 38 Korean overseas going shipping firms' (registered as of 1999) balance sheets in 2000 and found that debt ratios shot up to 848 percent from 328 percent in 1999, in part due to vessel deliveries ordered before the outbreak of the Asian currency crisis, including ten LNG vessels, debt increases due to the won's depreciation, and losses in securities. The owned equity ratio also dropped to 10.5 percent in 2000, from 23.3 percent in 1999.

Last year, the assets of the 38 shipping companies increased to 1.96 trillion won, up 10.1 percent from 1.78 trillion won in 1999, while capital decreased to 2.75 trillion won, down 49.8 percent from 4.17 trillion won, and debts stood at 17.6 trillion won, up 28.5 percent from 13.7 trillion won in 1999.

Cargo transportation just posted 472 million tons, falling 2.1 percent under the 482 million tons in 1999 because of the slowing global world economy. The won's depreciation of 10 percent, however, contributed to rates incomes of 16.79 trillion won, showing a 9.4 percent increase compared with 15.35 trillion won in 1999, as well, operating profits jumped to 1.22 trillion won from 814.9 billion won in 1999.

Meanwhile, Hyundai Merchant Marine came out on top for the second year in a row with a 5.18 trillion won of sales, posting a 7.3 percent increase over that of 1999. The won's falling (1,145.4 won in 1999 to 1,259.7 won in 2000), on the other hand, caused a net loss on its balance sheet, making non-operating expenses surge by 76.9 percent in dollar exchange rate debts.

Cho Yang Line came out 4 billion won in the black, taking first place for net income. HMM, on the other hand, showed the biggest net loss, 310.5 billion won.

These sharp won exchanges seemed to negatively affect vessel acquisitions through credit loans abroad, said an official at MOMAF.