Samsung Heavy Industries' shipyard on Geoje Island, South Gyeongsang Province / Courtesy of Ministry of Trade, Industry and Energy

Samsung Heavy Industries and Hanwha Ocean have failed to meet their annual targets for shipbuilding orders this year as of Thursday, despite favorable market conditions, according to industry officials.

Samsung Heavy said Tuesday an Oceanian shipowner's order to build two very large ammonia carriers (VLACs) collectively worth around $240 million enabled it to achieve 72 percent of its goal of winning $9.5 billion worth of orders this year.

Hanwha Ocean reached 57 percent of its goal of winning $7 billion worth of orders this year, as it signed a main contract with the Defense Acquisition Program Administration last Friday, regarding the construction of a submarine worth 1 trillion won ($776 million).

Neither company is expected to achieve its goal by the year-end, considering the slow progress in their negotiations with QatarEnergy about the construction of additional liquefied natural gas (LNG) carriers for the Middle Eastern country.

Even if they both win orders for 10 LNG carriers from QatarEnergy, they will not be able to achieve their annual goals, considering an LNG carrier costs around $265 million on average.

In addition, declining global demand for vessels is expected to make it more difficult to win orders next year, although the two companies are forecast to see a growth in their earnings this year.

"There will be no significant reason next year for global shipowners to place shipbuilding orders," said Yang Jong-seo, a researcher at the Overseas Economic Research Institute of the Export-Import Bank of Korea. "The size of shipbuilding orders in Korea will decrease 16 percent to $28 billion in 2024."

Amid the skeptical outlook, a Samsung Heavy official said the company will continue to sort out lucrative orders next year because it has already won enough orders in recent years.

"We do not need to rush to achieve our annual goal, as we have already won many orders," a Hanwha Ocean official said.

Hanwha Ocean's shipyard on Geoje Island, South Gyeongsang Province / Courtesy of Hanwha Ocean

In contrast to the two shipbuilders running shipyards on Geoje Island, South Gyeongsang Province, HD Korea Shipbuilding & Offshore Engineering achieved its goal of winning $15.7 billion worth of orders this year, when it signed a contract with QatarEnergy in October regarding the construction of 17 LNG carriers worth $3.9 billion.

Since then, the HD Hyundai subsidiary that manages three shipyards in Korea has continued winning additional orders, achieving 142 percent of its annual order target. On Dec. 15, the company said it won a $500 million order from an Oceanian shipowner for the construction of three ethane carriers.

Based on the achievement, HD Hyundai will reportedly pay record-high performance-based salaries to employees working at its shipbuilding affiliates.

According to industry officials, HD Hyundai Heavy Industries will pay bonuses equivalent of up to 251 percent of each employee's base monthly wage, while Hyundai Samho Heavy Industries will pay bonuses equivalent of up to 399 percent of each employee's base monthly wage.