Daewoo Shipbuilding & Marine Engineering Co., a major South Korean shipyard, said Tuesday that it swung to a net loss in the third quarter of the year due largely to increased costs stemming from a delay in the construction of low-priced ships and offshore facilities.

Net loss came in at 1.36 trillion won ($1.2 billion) in the July-September period, compared with a net profit of 10 billion won a year earlier, the company said in a regulatory filing.

The shipyard posted an operating loss of 1.22 trillion won in the third quarter, a sharp turnaround from an operating income of 135 billion won a year earlier, while sales dropped 25 percent on-year to 3.16 trillion won.

The third-quarter loss, however, narrowed from its record quarterly loss of 3.04 trillion won three months earlier, and its operating loss also narrowed from a record red figure of 2.29 trillion won, according to the company.

In the first nine months of the year, its net loss reached 3.83 trillion won, and its operating loss stood at 4.3 trillion won.

Daewoo Shipbuilding closed at 7,130 won on the Seoul bourse, up 2.44 percent from the previous session's close. The third-quarter business results were released after the market closed.

With its loss ballooning, creditors, led by state-run Korea Development Bank, are set to unveil a plan this week to rescue the financially troubled shipbuilder.

On Monday, the shipyard's labor union agreed not to seek pay hikes and go on strike in return for a massive rescue plan estimated at over 4 trillion won.

Local shipyards are struggling with increased costs stemming from a delay in the construction of offshore plants and an industrywide slump. (Yonhap)