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May 18, 2004

DSME eyes global expansion

According to South Korean press reports, Daewoo Shipbuilding & Marine Engineering Co., plans to establish a global business network covering the Middle East, the Caspian Sea region and West Africa and build production facilities in those areas. It may also acquire a Western European yard to gain access to the cruise ship market.

Daewoo Shipbuilding president Chung Seong-jin reportedly told a press conference that the South Korean shipbuilding giant has set a long-term target to raise consolidated annual sales, including overseas operations, up to Won 20 trillion (about $17 billion) by 2015 from W4.5 trillion projected for this year. To achieve the goal, Daewoo plans to inject W2 trillion in new business sectors such as logistics and energy and in setting up global networks. The company also plans to boost operating profit to W3 trillion by 2015.

According to the Chosun Ilbo newspaper Chung said the goal to make forays into the targeted regions is expected to be achieved within next two to three years as the company is getting a lot of calls for joint projects from local partners. To enter the higher margin luxurious cruise ship-building business, Daewoo is now considering a plan to acquire shipyards in Western Europe and to build a production faciliy in China around 2012.

Chung also said the company's Geoje Island yard will be retained as a Research and Development (R&D) center for development of state-of-the-art ships, but the shipbuilder will not pursue any facility build-ups.

Chung said the company's main shareholder Korea Development Bank has yet to decide its position on the planned sale of the company. Chung reportedly said it is likely that a consortium of investors would acquire the company's shares while ensuring independent management of the enterprise.

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