Author : Hwang & Co
Date : 06-02-09 09:16
Hit : 24897
-5 New Cabinet members reshuffled under fierce criticism from ruling party. -Prof Hwang's papers were found faked. -Public servant formed labor union. -Teachers established a new union, friendly to free democracy and market economy. -Korea started talks for FTA with USA. -Japan's PM defends his visit to Yasukuni Shrine. -A fissure between SKorea and USA on economic sanctions against NK. -Hermes faces heavy fine on charge of stock manipulation. -Samsung Electronics topped $100 bil in market value. -Overseas construction sees boom in MidEast and emerging Asian market. -Doosan Group reorganize itself into holding company. -KOSPI again on the roller-coaster. -Kwon hit 967, 8 year low. -China's shipbuilding steel plate price plummeted. -HHI plans to step-up holding company in China and invest Chinese steel mill.
GOVERNMENT AND POLICY
President Roh Moo-hyun named 4 new cabinet members on the first working day of the New Year, such as the deputy prime minister for science and technology, the unification minister, the commerce/industry/energy minister, and the labor minister. A few days later he also nominated Rep Rhyu Si-min, 46, a former student activist, the new health minister, ignoring fierce opposition from within ruling party. The new appointees will undergo parliamentary hearings early Feb before officially taking the office. President Roh's unilateral decision on the cabinet reshuffle has come under attack from lawmakers on all sides, especially from his ruling Uri party, lawmakers of which criticized the president over his choice of new ministers and its timing, especially at the appointment of Rep Chung Sye-kyun, the Uri's acting chairman and floor leader, as DPM for science, and Rhyu. They fear Chung's departure from his current position could drive the already troubled party into confusion ahead of its national convention in Feb and local election in May, and Rhyu¡¯s inclusion would significantly diminish their chance of winning crucial general election, because of his radical and provocative image. Senior members of the ruling Uri Party rejected a meeting with President Roh amid a furor triggered by the president's choice of new health minister.
The Seoul National University investigation panel, consisting of 6 faculty members and 2 outside experts, concluded in its final report that Scientist Hwang Woo-suk and his team fabricated data for a 2004 stem-cell paper and 2005 paper which claimed to have developed custom-made stem cells, published in the U.S. journal Science. It said that 2 major steps are needed to create patient-tailored stem cells: one is to clone embryos and grow them to an early stage embryo called blastocyst and the other is to cultivate them into stem cells, but Hwang's team did clone embryos and grow them to blastocyst, but stem cells were not created from them. Overall, the panel concluded Hwang's team had no technology to develop stem cells which raised hopes for replacing cells damaged by diseases such as Parkinson's and diabetes. However, Hwang's team has made some advancement toward creating stem cells. The panel confirmed that Hwang's claim of having produced the world's first cloned dog is authentic. The government announced a series of measures with regard to Dr. Hwang's case, realizing "the worst scenario has become reality". Government is to change the use of the Hwang's Research Center in which it has invested KW12.5 bil so far. The government considers striping Hwang of his status as the country's "top scientist" title awarded in June. The government plans to scrap its funding and cut subsidies for Hwang. SNU President pledged stern punishment for Hwang and the researchers on his team as an "academic crime", and stripped him of the chaired professor title. World Technology Network cancelled its 2005 Bio Engineering Award given to Hwang. Disgraced scientist Hwang apologized to the public after admitting to inflating the number of stem cells for his 2005 paper published in Science journal, but accused his researcher partner of fabricating data and misleading his team into believing that the landmark stem cells existed. He previously accused his partner of swapping cloned embryos with normal embryos and called for a thorough investigation by the prosecution. Hwang still claimed he has made advancements in creating stem cells and will eventually make them in collaboration with other stem-cell experts, insisting that the world's first cloned human embryonic stem cell created in 2004 is authentic. One time, Hwang was a national hero and on television news broadcasts, he held the hands of wheelchair bound patients, saying "I will make you stand up." Despite the revelation, a lot of patience of hard to cure disease still wants to believe in Dr. Hwang and think Dr. Hwang will cure their disease. The prosecution started to investigate to look into the authenticity of the studies of Hwang, it was reported one of his junior female researchers was coerced into donating her eggs in 2003. The prosecution confirmed SNU panel's conclusion that the No 1 stem cell in the 2004 Science paper was indeed created by parthenogenesis, which is an achievement on Hwang's part. The result of full investigation will be known in Feb.
A state-run institute predicted that Korea's per capita GDP could jump three-fold to $45,000 in 2020, with annual economic growth averaging 4.6% over the same time frame. The GDP will rank among the top 10 in the world and Korea becomes the seventh largest trading nation with its trade volume of $1.4 tril. Korea's per-capita consumption of rice decreased 1.6% on year to 80.7 kg last year due to increased consumption of fast foods such as bread and pizza. Per-capita rice consumption has dropped significantly since 1990 when it reached 119.6kg, dipping to 99.2 kg in 1998. The government plans to invest KW19.3 tril by 2010 in a package of measures to boost the nation's day care services and preschool/education for infants and to improve childcare facilities.
With the legalization of public servants' labor unions, about 300,000 civil servants were formally allowed to join labor unions, which will bring about major changes in the nation's labor movement. Their participation will make the nation's second-largest labor union, Korean Confederation of Trade Unions, the nation's largest labor organization with more than 800,000 members. A group of teachers planned to establish a new union as a viable alternative to the left-leaning progressive teacher's union, criticizing its hard-line attitude by teaching anti-American and pro-NKorean ideology. The group claimed to advocate the principles of a free democracy and market economy in education. The Education Ministry has decided to audit 18 private schools whose management is suspected of corruption or other wrong-doing. The decision follows an earlier request by the ruling Uri Party.
Finance Ministry voiced strong support for reducing screen quotas, describing the local film industry¡¯s protests as an act of collective selfishness, as Korean films are strong enough to enjoy half of the local market. Following a government decision, theaters will only be obliged to screen Korean movies for 73 days a year instead of the current 146 days, starting in July. It came days before the economic ministers' meeting between Korea and USA to start talks for a free trade agreement, for which Washington preconditioned easing the screen quota. The local film industry responded explosively to the decision, denouncing that the government's move signifies a cultural coup d'etat, and stressed that the cultural products should not be negotiated on the same level as other industrial items.
Korean-born American video artist Paik Nam-june died at his home in Miami Florida. He will be cremated and his ashes are to be placed in his homeland, in USA and Germany. His funeral is expected to be held at Frank E. Campbell funeral chapel on Madison Avenue in New York.
Japan's Prime Minister denied that his visits to Yasukuni war shrine hurt Japan's position in Asia, saying only China and SKorea had complained. He said Japan, the worlds second-largest aid donor, would continue to support development in Asia alongside USA, and maintaining close Japan-USA relations is very important when Japan try to promote diplomatic ties in Asia. Japan's foreign minister called for Emperor to visit a controversial war shrine, a move that would inflame tensions with Asian countries. Late wartime emperor Hirohito stopped visiting the shrine after it enshrined top war criminals in 1978, which has become a thorn in relations with neighboring nations. Irans Deputy Foreign Minister said his country will reconsider its relations with SKorea if Seoul votes against the country at the board of the International Atomic Energy Agency (IAEA) in March over Tehrans nuclear programs.
NORTH KOREA AND NATIONAL DEFENSE
A US Secret Service Team for Terrorist Financing and Financial Crimes visited SKorea as part of an Asian tour to discuss the NKorea's counterfeiting issue. In Sept last year US Treasury banned American financial institutions from dealing with a Macau-based bank, accused of allegedly laundering money for Pyongyang and helping circulate counterfeit dollars. NK is also accused of drug trafficking and smuggling fake goods such as tobacco. They reiterated Washington's position that banning American banks from dealing with a bank in Macau was not a sanction but a "defensive measure." Washington has rejected a NKorea¡¯s request for direct talks on the issue, saying the sanctions are not negotiable, however, says the sanctions and the six-party talks are separate matters. The dispute has prevented the six parties from even setting a date for resumption of the talks, which were last held for 3 days in Nov. NKorea said it cannot return to nuclear disarmament talks unless USA lifts sanctions, complaining that the evidences supplied by USA to justify financial sanctions had turned out to be "baseless" fiction.
All SKorean and US workers left a nuclear reactor construction site in NKorea, putting an end to the decade-old light-water reactor project arranged by the Korean Peninsula Energy Development Organization from Aug 1997. NK demanded compensation for halted two 1,000-megawatt light-water nuclear reactors, accusing USA of intentionally disrupting the 11-year project.
NKorean leader Kim Jong-il visited to the southern part of China for 8 days, including Shenzhen, a Chinese model of a market economy just across the border from Hong Kong by train, with his exceptional preference to airplane. Beijing has long urged NK to adopt Chinese-style reforms, partly to reduce its dependence on food and fuel aid supplied by China. A NK-China summit was held for both sides to agree on peaceful settlement of nuclear dispute. Noting that there have been significant changes in the NK's economic policy each time Kim visited China, even more changes in policy is expected after his latest trip.
SKorea has recently taken over the copyright licenses of work from 34 NKorean writers. 47 pieces of NKorean writing will be published in the South. South and North Korea will join hands to excavate the royal residence of the Koguryo Kingdom during its prime in the 5th to 6th centuries in Pyongyang, hoping to restore one of the earliest relics of Korean history. It will be the first time the 2 Koreas have teamed up to research a site from their shared history.
Korea¡¯s foreign ministry dropped its traditional reserve and openly lambasted US embassy in Seoul for using "inappropriate" language in a press release on a briefing indicated a fissure between Seoul and Washington. The embassy claimed that US Treasury officials urged Korean government to act on NK's alleged counterfeiting, but the ministry shot back that no such "urging" took place during the briefing, saying that the US official has been appreciative of SKorean government's domestic tools against circuits of illegal money and it has formally clarified that the 2 governments will continue to cooperate closely. Visible strains have appeared between Seoul and Washington lately when USA is fighting against terrorism and terrorist-sponsoring states, while SKorea remains mute and neutral on the issue. President Roh in his New Year news conference said his administration would not tolerate any move by Washington to topple the NKorean regime, while reiterating that Seoul and Washington maintained the same understanding.
ECONOMY AND POLICY
For the whole of last year, the economy grew 4%, down from 4.6% in 2004, but higher than BOK's estimate of 3.9%. BOK forecasted the economy to grow 5% in 2006. Consumer spending grew 4.6% for 4th quarter and 3.2% for the full year, a sharp turnaround from a 0.5% decline in 2004.
For the full year of 2005, Korea¡¯s current account surplus stood at $16.6 bil, down from $28.2 bil in 2004. It is projected to further shrink to $16 bil this year. Exports in 2005 rose 12.2% on year to $318 bil and imports increase 13% to $295 bil, resulting in a trade surplus of $23 bil. Exports of digital electronics products hit a record $102.8 bil in 2005, up 6.3% on year, despite the stronger KWon and greater competition with China, attributing to improved quality of the products, improved brand recognition and strong demand for mobile phones, liquid crystal displays, semiconductors, digital electronics parts and refrigerators. It becomes the country's first solo industry to export more than $100 bil on an annual basis, resulting in a trade surplus of $46.3 bil. Korea's service account posted a record deficit of $13.1 bil last year because of more spending overseas, as the five-day workweek has been expanded and parents sought higher-quality education abroad for their children while escaping from increasing private education costs at home. Korea¡¯s exports to China are likely to surge 20% annually to $74 bil this year thanks to brisk shipments of key items such as flat panels. Last year, exports to China jumped 24.6% on year to $56.4 bil. Korea's trade deficit with Japan came to $23.73 bil last year, on the exports of $23.24bil.
Dubai oil, the mainstay of Korea's oil imports, hit a new high of $60.78 a barrel, as global crude supply anxieties grew on political unrest in oil rich regions and recent terror threats broadcast by al-Qaida. Some analysts have raised concerns that a further deterioration in the Iranian nuclear standoff could drive it up higher than $100. Korea's dependence on the Middle East for oil has never been improved, reaching an alarmingly high level, about 689 mil barrels, 81.8% of its total oil supply in 2005 for the first time in 2 decades. About $43 bil was spent for oil imports last year, a record high, up more than 40% on year.
Hermes Investment Management was issued a summary indictment, stricter-than-expected measures, by the prosecution on charges of stock manipulation. It is the first time a foreign firm has been indicted in Korea on such charges and the first indictment against Hermes in its history. Hermes faces a fine of KW7.3 bil, and an arrest warrant has been issued for former fund manager of the Korean operation during 2003-2004 when the alleged action occurred. Hermes insisted that it has complied with Korean rules and regulations in all of its activities, saying that they currently have investments worth more than $500 mil in Korea, and wish to continue long-term investments with Korea.
BOK stressed the need to establish the collateralized loan obligation system that can facilitate the issuance of securities backed by a pool of commercial loans, allowing banks to securitize their loans to small and medium-sized companies, thus helping them lower lending risks as well as secure liquidity. Despite the brisk capital demand from the SME sector last year, local lenders were projected to have extended KW245 tril of loans to small and medium enterprises, a mere KW12 tril increase compared to a year earlier.
Samsung Electronics (SEC) topped $100 bil in market value, joining Vodafone Group as the only technology stocks outside USA to pass the milestone. The total value of SEC's common stock reached KW101.6 tril, overtaking the capitalization of Nokia, Motorola and Sony. SEC's sale in the fourth quarter of 2005 rose to KW15.52 tril thanks to strong sales of chips and flat display panels. It posted net profit at a better than expected KW2.56 tril up almost 40% on year. It expects strong demand in 2006 for value-added, "specialty" DRAM and large-storage NAND flash products increasingly used in MP3 players, mobile phones and other consumer electronics devices. S&P raised SEC's credit rating for long and short term corporate bonds from `A-/A-2` to `A/A-1`, citing the strengthened market position in its main stream business like DRAM, NAND Flash, TFT-LCD and mobile phone. Its rating becomes same as sovereign rating.
SK Corp, the country's largest oil refiner, and state-run Korea Resources Corp won approval for coal exploration in the Australian state of Queensland. The deposit is estimated to hold about 300 mil metric tons of soft coal. It will be the country's first fully-owned project in Australia. They will spend a total of $150 mil to hold a 50% stake. Daewoo International, one of the nation's leading trading companies, discovered a large gas reserve in Myanmar near the company's already secured gas fields. The gas field covers 6,780 sq km, with a 65% gas saturation rate. Holding a 60% stake in the gas field, it has led the project jointly with KOGAS and 2 Indian oil companies. Korea Coal Corp agreed with Chinese authority to develop a coal mine in China and import the coal to Korea. Estimated reserve is 680 mil tons.
Carlsberg has sold its remaining 11.86% stake in Korea's largest beer-maker Hite Brewery. Textile producer Taekwang Ind is to acquire 9 mil new shares, a controlling stake in Ssangyong Fire & Marine Insurance, for KW66 bil. Dacom Corp decided to take over Korea Internet Data Center, Korea's leader in the Web hosting market and to sell its 28.8% stake in customer support provider CIC Korea to TCI, a Japanese company.
Hyundai Motor (HMC) is aiming to sell a total of 2.68 mil vehicles, 15.1% more on year this year, driven by the introduction of new models at home and abroad,. It plans to invest a total of KW3.4 tril to upgrade its facilities and R&D activities. HMC set the target to sell 630,000 cars in domestic market in 2006, up 10.3% on year, achieving local market share more than 50%. HMC was recognized global first in Share Holder Return with 79.5%, against industry's average of 9.4%. Kia Motors sold 1.28 mil cars in 2005, up 13.9% on year, for the first time to exceed a mil sale.GM Daewoo Motor sold 1.16 mil cars in 2005, the biggest sale in its history, compared with 908,000 units in 2004. Renault Samsung records the sale of 119,000 units in 2005, 39.9% rise on year.
HMC has agreed with Chinese government to build its wholly owned second engine plant in China. It will also increase annual engine production capacity at its first plant in Beijing to 500,000 unit from the current 300,000 units. HMC Group's INI Steel signed an initial agreement to purchase 4-5 mil tons of iron ore and up to 3 mil tons of coking coal from Australia's BHP Billiton from 2010. The amount would cover about 40% of the raw material required to produce 7 mil tons of steel every year at INI's new mill. When the new facility is completed in 2011, HMC Group's annual steel production is expected to reach 21.8 mil tons including 4.5 mil tons and 300,000 tons from INI's affiliates Hyundai Hysco and BNG Steel, respectively, aiming to become the world's sixth-largest steelmaker in 5 years.
Local construction volume may go down this year due to the restriction by Government, but the overseas construction sector is looking up with the order volume climbing 19% to $13 bil in 2006, following a 45% increase to $10.9 bil in 2005, thanks to a high volume of building projects from the Middle East and emerging Asian markets. Hyundai Construction set the target of order in 2006 at $2.6 bil, same level as in 2005, aiming to secure the order in selective basis for highest profitability. Daewoo Construction clinched a $875 mil deal from Shell Petroleum Development of Nigeria to construct an Integrated Oil & Gas Project in Southern Nigeria. SK Construction secured order from Kuwait's Petrochemical Ind to build a Aromatics Complex Project worth $12.4 bil for annual production of 1.9 mil tons of basic petro chemical material, jointly with Technimont of Italy.
Doosan Group plans to reorganize itself into a holding company that does not produce goods or services itself, but whose only purpose is owning shares of other companies. In the new roadmap to better corporate governance, Doosan Corp will perform the function of a holding company in 3 years and its 15 subsidiaries with business interests ranging from food and beverages to heavy machinery and power plants, will each be run by its own board.
STX Group, rapidly growing conglomerates, aims to achieve KW15 tril in total annual sales by 2010, achieving its ambitious goal of earning KW5 tril each in its 3 main business areas, such as energy, shipbuilding/machinery and shipping/ logistics. In 2005, the company posted KW6.4 tril in total sales, compared KW4.9 tril in 2004. The Group projects its consolidated sales as much as KW8.1 tril this year, specifically KW900 bil from energy, KW3.7 tril from shipbuilding and KW3.5 tril from shipping.
Market researcher iSuppli Corp revealed that LG Philips LCD became the world's leading manufacturer of liquid crystal displays last year, by clinching 21.4% of the global LCD market, compared with its arch rival SEC's 20.9%.
POSCO, the world's fifth largest steel maker, held a ground breaking ceremony in India to build a processing center for electrical steel on surging local demand. The facility, PO-IPC, is scheduled to be completed in Oct and have the capacity to process 130,000 tons of electrical steel annually. POSCO started operation of its second facility in Thailand to supply steel sheets for the use in automobiles, expecting to process 120,000 tons of steel sheets in various forms and sizes annually.
MONETARY AND ECONOMIC INDICES
It was another month to see the bourse on the roller coaster. KOSPI started the year at 1389, the highest in the history thanks to buying rally by foreigners as well as domestic investors, kept surging to 1421, continuously renewing the records, despite the unstable exchange rate of KWon, then suddenly started nose dive more than 2% for several consecutive days reflecting the resistance at the 1400 barrier, hit 1297 breaking psychologically significant 1,300 level with panic selling, and began to recover following the recovery in New York market and softened oil prices, to end the month at 1399.
KWon has kept strengthened through out the month. On the fist day of the year, the exchange rate of KWon against USDollar broke 1010 level to 1008, on Jan 4th even 1000 was broken to 997, for the first time in 8 months, and reached 967 at the end of the month, hitting an 8 year low, growing its strength under the fear that US Federal Reserve may end its rate hikes in the near future and Beijing moves toward more flexible trading of CYuan. Korean authorities jointly carried out the inspection to weed out manipulators or other factors that might distort the foreign exchange market, and increase the portion of foreign exchange equalization bonds to keep the exchange rate from sinking under KW980, but all in vain. It was estimated that a 5% drop in KWon will cause 0.35% fall in GDP, $2.9 bil decrease in current surplus and 3-5% loss of profit in export industry. Inflation seems to accelerate to 3% this year from 2.7% in 2005. The yield on 3 years corporate bond has been slightly lowered from 5.61 to 5.48%in Jan. The unemployment rate in Dec dropped to 3.5% from 3.6 percent in Nov.
KWon has been strengthened from 1134 to 1005 against USDollar through the month, with FRB's indication of no further rate raising. Korea¡¯s foreign reserves rose $2.16 bil in Dec from Nov to reach $210.39 bil.
SHIPBUILDING AND SHIPPING
Korean shipbuilders experienced another bumper year in 2005, receiving combined orders of 14.5 mil CGT, almost twice of EU, ranked second with 8.5 mil CGT, China 7 mil and Japan 6.2 mil CGT. Korean shipbuilders¡¯ global market share expanded to 38%, up from 36% in 2004. As of end Dec, HHI kept unshakable World No 1 with order backlogs of 10.6 mil CGT, DSME regained No 2 with 7.7 mil CGT, followed by SHI with 7.3 mil CGT. HMD and Hyundai Samho climbed one step each to No 4 and No 5 in the world, respectively. The prices of ship building steel plates in China has plummeted by 45% to around CY3,300 ($409) a tonne from its peak of CY5,900 a tonne around 12 months ago. The Chinese share in the global shipbuilding market has been increased to 18%. Average age of Korean shipyards workers has been passing 40 to 40.8 years. HHI is in the most serious position with average age of 44.5 years in 2005, compared with 43.5 in 2003 and 44 in 2004, while the retiring age is 57 years. Dong Kook Steel Mill lowered its steel prices by KW20,000 per ton, from KW635,000 to 615,000, equivalent to POSCO¡¯s.
HHI targets shipbuilding sales of KW6.5 tril ($6.6 billion) this year, up 23% from 2005, focusing on technological development of high value-added vessels such as LNG carriers and super-sized LPG tankers. HHI has successfully reduced the time needed from keel laying to loading out for a 105K crude carrier in onshore construction from 85 days to 55 days. 2 years after they started onshore assembly, HHI cut the duration to a level similar to normal shipbuilding in the dry dock by making the blocks larger. HHI has already built 6 ships on the new method and received orders for another 10 vessels to be assembled on the ground. HHI plans to set up a Chinese holding company, with the capital at $30 mil in March in the Pudong district of Shanghai, to be responsible for supporting its existing businesses in China as well as the development of new projects. The new holding company will outline long-term strategies to tackle various risks in its existing interests in construction equipment and heavy electric machinery, as well as finance, public relations, legal affairs and IT operations of HHI's 5 production units in Beijing, Changzhou and Yantai. HHI exchanged a Letter of Intent with China¡¯s Shougang Group to take the stake of Chinese company for the stable supply of thick plates from China. HHI imported 200,000 tons of steel from China and plans to increase to 400-600,000 tons out of its total requirement of 2.7 mil tons in 2006. HHI got the order from HMM for 2 x 82K VLGC. HMD received order from Geden Line for 4 x 47K and 4 x 37K PC, Gulf Energy Maritime 4 x 47K chemical carriers and Navigazione Montanari 2 x 40K pc/chemical carrier.
DSME got the repeated order from Exmar for 1+1 x 150K LNG-RV and Vela 6 x VLCC. DSME posted oprational loss of KW124 bil in 2005, from profit of KW60.8 bil in 2004, on the material cost hike and strengthened exchange rate. It recorded net profit of KW7.6 bil down 96.9% on year, on the sale of KW4.7 tril 1% down on year. SHI escured orders from Teekay Shipping for 2 x 150K tanker, Genden 2 x 115K tanker and Chandris 2+1 x 115K tanker. SHI secured rushing order, riding on the owner sentiment that the new IACS rules, effective from April 1, will result in an increase of 3-4% in steel weight for the ships and there are very limited tanker berths left for 2009 delivery in Korea. It also had orders for 2+1 x 4,300 teu and Cabinda Gulf Oil 1 x Offshore Platform. SHI recorded net profit of KW72.4 bil 36.3% up on year, operational loss of KW4.3 bil improved 96%, on the sale of KW5.55 tril in 2005 19.1% up on year. STX Shipbuilding experienced the year of 2005 as a record-breaking year in terms of the total value of newbuilding orders, securing 48 orders worth $2.1 bil, compared 54 ships for $1.7bil in 2004. This year is targeting to secure 50 ships of $2.5 bil, targeting higher value vessels such as LPG and LNG carriers, and aiming to emerge as the seventh-largest shipbuilder in the world from 8th this year. STX received the orders from Primorsk for 2+3 x ice 1A MR tanker, and STX Busan from Berlian Laju Tanker for 2 x 9K ethylene carriers
Korea launched its bid to become the logistics and financial hub of Northeast Asia as it raised the curtain on the Busan New Port. Operations began at 3 of the 30 container berths. Korea hopes its largest port will eventually become the world's busiest logistics terminal because of its strategic location and competitive services. Busan now ranks as the world's fifth-largest container port and is directly competing with Hong Kong. Hanjin Shipping sets up aggressive investment plan for the preparation of slumping days to come. Its plan in 2006 includes the investment of $580.23 mil, more than double of 2005, in an estmated sale of $6.53 bil and oprational profit of $548 mil. In an anticipation of reduction in profit of bulkers more than 30%, it is to concentrate on diversification of business in 2006. HMM¡¯s sales last year dipped 5.3% to KW4.85 tril with the depreciation of USDollar. Operating profit and net profit of the nation's second largest shipper declined 14.8% and 9% on year to KW472.4 bil and to KW389.5 bil, respectively. In 2006, HMM aims to raise sales to $5.2 bil and operating profit to $370 mil. HMM plans to invest $128 mil in new ships. Its debt to capital ratio shrunk 139% to 237 percent. Geverend Trading, known as a subsidiary of Golar LNG continued increasing the stake in HMM, by acquisition of 1.2% in Dec, raising total stake to 15.8%. Korea Line took the delivery of a 176.8K bulker, named Caladium. It posted its sale in 2005 at KW1.11 tril up 3.5%, with operational profit of KW90.9 bil down 45.4% and net profit of KW85.8 bil down 57.3% on year.