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Hyundai's ship unit to see revenue jump 26%

By Reuters

Hyundai Heavy Industries, the world's largest shipbuilder, said its estimated 2008 revenue would reach $15.6 billion (Dh57.2bn), up 26 per cent from 2007.

The South Korean company said in a filing with the Korea Exchange that it won $28.2bn worth of orders this year, a 13 per cent increase from 2007.

The shipbuilding industry faces declining orders and falling shipping demand as the global downturn deepens, but sector leaders such as Hyundai and rival Samsung Heavy Industries are poised to weather the slump thanks to backlogs of crude and bulk carrier orders won during the past boom years.

Meanwhile, shipmakers in India may maintain profit growth in 2009/2010 but order flows will deteriorate further as shipping services firms, stung by a credit crisis and plunging sea rates, put expansion plans on hold and cancel orders.

ABG Shipyard, India's largest private listed shipbuilder, received its last order in June worth $121 million.

Rival Bharati Shipyard, which has an order book of $998m, is mostly executing old orders "In terms of financials, they are not going to be impacted as they already have booked orders until 2010/2011", said Anand Sharma, a Mumbai-based independent shipping consultant.

"So, if in 2009 there are no orders, it will give them an indication that worse is around [the corner]. In such a situation, 2010 calendar year could be bad financially," he added.

State-run Shipping Corporation of India has postponed its Rs50bn (Dh654.2m) expansion plans by at least six months, while Essar Shipping Ports and Logistics cancelled orders for three vessels.

Shipping firms overseas are also going slow on expansion, making it tougher for shipyards to survive, analysts said.

Estimates show 30 per cent of the orders for dry bulk carrier ships globally could be cancelled because of lack of finance.