Tuna vessel belonging to Dongwon. (Photo: Dongwon)

Dongwon improves profits thanks to new fishing vessels and better tuna price

South Korea’s largest deep-sea fishing company Dongwon Industries Co. achieved recovery in its operating profits for the period from January to June after being negatively affected by falling fish prices and aging vessels over the past few years.

The firm’s operating profit for that period amounted to KRW 64.3 billion (USD 57.4 million) and its sales rose KRW 100 billion (USD 89.4 million) on year to KRW 780 billion (USD 697.4 million).

Thanks to the purchase of new vessels and a rebound in catch and tuna prices, the firm is expected to achieve solid earnings in the rest of this year.

 “Dongwon Industries is expected to see its sales grow by 2.8 per cent per year on average over the next three years and operating profit would rise to KRW 144 billion (USD 128.7 million) by 2018 as the replacement of its old fleets with new ones would boost the amount of catch significantly,” pointed out Kim Yoon-oh from Shinyoung Securities Co.

 Therefore, its operating profit is expected to exceed KRW 100 billion after its second-quarter operating profit surged 206 per cent on year to KRW 45.2 billion (USD 40.4 million).

In addition, the fishery business returned to profit in the April to June period in seven quarters after the division achieved KRW 12.7 billion (USD 11.3 million) in operating income on sales, which was up more than 60 per cent on year.

The rebound in tuna prices also contributed to the improvement in the company’s earnings. Tuna prices averaged USD 1,500 per ton in the second quarter this year, up 34.2 per cent from the same period last year.

Prospects are also bright for its distribution business that represents 63 per cent in its entire business. Starkist Co., wholly owned by Dongwon, is the leading canned tuna provider in the U.S., accounting for 40 per cent in the market.

Its canned tuna business is benefitting from a synergy effect created by Dongwon Industries’ stable supply of tuna and its affiliate Dongwon F&B Co.’s prowess in producing canned fish and retailing.

The company that has been aggressive in mergers and acquisitions is expected to continue to seek acquisition targets amid an excessive supply in the canned tuna market.
 

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Country:	South Korea
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