Hanjin, South Korea’s largest shipping company, and Hyundai Merchant are expected to post losses next year as well, according to analyst estimates compiled by Bloomberg.
Hanjin Shipping Co., Hyundai Merchant Marine Co. and STX Pan Ocean Co. are all forecast to post losses in 2013 for a third consecutive year, further denting the combined 1.3 trillion won of cash and near cash items they had as of the end of September. The companies need to repay 1.4 trillion won of bonds next year and 1.6 trillion won the year after.
A debt-fueled expansion after the 2008 Lehman Brothers Holdings Inc. bankruptcy filing pushed the carriers into losses so deep they may need financial assistance to repay loans taken to buy new vessels, said Kim Ik Sang, a credit analyst at HI Investment & Securities Co.
“It’s pretty much out of their control,” said Seoul-based Um Kyung A, an analyst at Shinyoung Securities Co. “Cash is depleting quite fast while the shipping industry isn’t showing any signs of a recovery. I don’t think we can completely forgo the possibility of things turning worse next year.”