The phenomenon is particularly evident with the Hyundai Heavy Industries, which ranks as the world's top shipbuilder, said the report.

Korea Shipbuilding and Offshore Engineering (KSOE), the Hyundai Heavy Industries Group's intermediate shipbuilding holding company, has announced its performance figures for the third quarter.

Quarterly sales were calculated at KRW3.56 trillion (US$3 billion), up three per cent year on year, while operating profits were up by 248 per cent to KRW140 billion.

The KSOE figures reflect the performance of three shipbuilding affiliates: Hyundai Heavy Industries (HHI), Hyundai Samho Heavy Industries (HSHI) and Hyundai Mipo Dockyard (HMD).

On their own, the numbers suggest that profits have improved substantially, but a closer look tells a different story, the report said.

Third quarter operating profit includes a large number of one-off gains. For instance, around KRW180 billion in profit was the result of a higher exchange rate - that is, a decline in the value of the won. As an export-based industry, sales for the same amount in foreign-denominated currency translate into higher values when converted into won.

Also contributing to the higher profits was the omission of KRW60 billion from third quarter operating expenses - an increase in production costs that the companies previously factored into their expenses in anticipation of a rise in the price of the rear panels used to build vessels.

While an expected increase of roughly KRW900 billion in expenses due to higher iron plate costs was already reflected last quarter, the actual price of the rear panels purchased from POSCO and other steel companies turned out to be less than anticipated.

HHI and other KSOE affiliates have swept up the 199 vessel orders made by global shipping companies so far this year. With a total of $17.7 billion in orders, they have reached 124 per cent of their target for this year - the result of a sharp rise in demand for ultra-large containerships and other vessels amid increased distribution and higher shipping fees.

The problem is that it will take some time before the order boom translates into financial performance for the shipping companies. The time between the order receipt and actual construction is around one to three years, and the results from the recent orders will be spread out over time to reflect progress with the building.