SEOUL, May 4 (Yonhap) — Samsung Heavy Industries Co. on Tuesday said its loss expanded in the first quarter from a year ago due to the COVID-19 pandemic and a surge in prices of steel plates.

Net loss expanded to 535.9 billion won (US$477.4 million) in the January-March period, from a net loss of 227 billion won a year ago, the company said in a regulatory filing.

Operating loss posted 506.8 billion won in the period, narrowing from an operating loss of 47.8 billion won a year earlier.

Sales fell 13.8 percent on-year to 1.57 trillion won in the first quarter.

“The operating loss stemmed from increased cost caused by a rise in prices of steel plates, allowances and the evaluation losses from its five drill ships that are the company’s inventory assets,” Samsung Heavy said in a separate statement.

Samsung Heavy predicted that it is expected to post 6.9 trillion won in sales and 760 billion won in operating loss this year.

On the back of recent brisk new orders, the shipbuilder revised up its annual order target to $9.1 billion from the current $7.8 billion.

The company has won orders for 42 ships worth $5.1 billion in the first quarter of the year.

As part of efforts to improve its financial health, Samsung Heavy plans to push for a capital reduction by cutting the face value of its shares by 80 percent from 5,000 won to 1,000 won.

The capital reduction will not decrease the number of its outstanding shares, so it will not hurt the valuation of shareholders’ holdings, the shipbuilder said.

The company will also raise 1 trillion won by selling its new shares, it said. But Samsung Heavy said its cash flow is in good shape, adding its cash on hand reached 1.2 trillion won.