Daewoo Shipbuilding and Marine Engineering Co, the world's second-biggest shipyard, said on Wednesday it was considering buying a yard to make cruise ships in Western Europe and establishing a production base in China.
The firm's overseas ambitions underscore concerns facing South Korean shipbuilders, which make up the top three rankings in the world, as profit margins are squeezed by higher steel prices, the key raw material for building ships.
Daewoo also plans to establish its own shipyards in Eastern Europe, the Middle East, Western Africa and East Asia to keep up revenue growth, instead of boosting local capacity.
"In order to advance into high value-added businesses, we want to start building cruise ships," Chung Sung-leep, Daewoo's chief executive, was quoted as saying by a spokesman. "To do so, we are considering buying a shipyard in Western Europe."
Daewoo declined to identify a potential takeover target, saying it was still at a study phase.
"For China, where ship demand is the largest in the world, we are planning to enter the market in around 2012, taking into account existing regulations there," Jung said.
Reflecting the ambitious offshore plans, Daewoo is targeting an operating profit of one trillion won ($844.5 million) by 2010 and three trillion won by 2015 on sales as high as 20 trillion won - around one fifth of the global shipbuilding market.
But the company forecast on Tuesday operating profits would fall 13 percent to 300 billion won this year from 2003, despite a projected four-percent rise in sales to 4.5 trillion won.
As part of a drive to diversify operations, Daewoo was also trying to expand into energy, transportation and distribution, it added.
Shares in Daewoo Shipbuilding jumped 5.7 percent to 12,050 won at 0251 GMT, outperforming a 4.2 percent rise in the broader market.
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