Hanwha delays Philly Shipyard profit as U.S. costs rise and orders slip

Hanwha Philly Shipyard Inc. in the United States has been struggling to turn a profit, with analysts now predicting the shipyard will break even in the following year instead of this year. The delays in construction and process issues for low-margin ships purchased before Hanwha Group's acquisition are hindering profitability. Among the various business divisions, the "others" division, which includes the Philly Shipyard, generated 229.7 billion won in revenue and reported a loss of 20.8 billion won in the second quarter.

This loss was primarily attributed to the Philly Shipyard, which incurred about 19.2 billion won in losses. The yard has been making losses for seven consecutive years since 2018. The major factor contributing to the losses is the delays in constructing ships Hanwha Group acquired before the acquisition. For instance, the yard has delivered three out of the five national security multi-mission vessels (NSMV) ordered from the U.S. Maritime Administration, but losses continue as construction costs rise.

Other losses include three container ships ordered from the U.S. shipping company Matson, which are delayed due to the completion of hull assembly and block fabrication. The shipyard currently has only one dock in operation, limiting its capacity to build about 1 to 1.5 ships per year. Hanwha Group aims to expand its capacity by building two new docks and three quays, but with a high cost structure in the United States, some experts believe it is difficult to achieve profitability without government subsidies.