Doosan Heavy I&C is turning around nicely after government bailout and restructuring

[Photo by Han Joo-hyung]

South Korean Doosan Heavy Industries & Construction Co., rescued by a state-led rescue operation, has made a positive change by realigning its main business to renewable energy as part of the government’s green coal and nuclear fuel plant initiative.

Doosan Heavy I&C announced in a regulatory filing on Tuesday that consolidated operating income for the January through March period reached 372.1 billion won ($ 334.05 million). This corresponds to a loss of 23.8 billion won a quarter ago and a more than six-fold increase over the previous year.

The company posted net income of 248.05 billion won in the first quarter after seven quarters of losses. Revenue declined 0.67 percent from the previous quarter, but rose 4.37 percent year over year to 4 trillion won.

Doosan Heavy I&C shares rose 1.43 percent to 14,150 won at 9:55 a.m. in Seoul on Wednesday.

The company owes it to its construction subsidiaries Doosan Infracore and Doosan Bobcat, whose sales were driven by a boom in the global infrastructure market with a faster-than-expected economic recovery, while bottom lines improved after downsizing.

Doosan Heavy I&C reported operating profit of 58.5 billion won on an isolated basis and, for the first time in 12 quarters, posted profit of 97 billion won.

The power plant equipment maker made self-rescue efforts after promising to raise 3 trillion won by divesting assets for 3.6 trillion won in financial assistance from state banks in April last year. It sold Club Mow Country Club in June for 180 billion won and issued new shares to existing shareholders to support the paid-up capital by 1.3 trillion won at the end of 2020.

Image enlargement The owner family coughed up their fortune to normalize the capital base for the financially troubled main support unit. Doosan Group Chairman Park Jeong-won and his family members donated their 23 percent stake in Doosan Fuel Cell worth 600 billion won as bonus shares to Doosan Heavy I & C in November.

In February of this year, the company sold a 36.07 percent controlling interest in Doosan Infracore to Hyundai Heavy Industries Co. for 850 billion won in February of this year.

Doosan Heavy I&C raised nearly won 3 trillion in capital through the divestments. The proceeds were used to settle snowball debts that had eaten up in the profit zone.

In business terms, the company is shifting its focus from thermal and nuclear to renewable energy in line with the Korean government’s policy of phasing out fossil fuels and nuclear energy. In 2020, the company won renewable energy contracts worth 360 billion won in Gimpo, Gyeonggi Province, 220 billion won in Poland, 400 billion won in Nepal, and 120 billion won in Changwon, South Gyeongsang Province.

Thanks to the strong comeback of the flagship plant unit Doosan Heavy I & C, the holding company Doosan Corp. Doosan Group reported operating income of 398 billion won on sales of 4.52 trillion won for the quarter ended March. The operating result more than quintupled and sales increased by 5.1 percent. Net income reached 402.3 billion won after a loss of 379.9 billion won a year ago.

By Han Woo-ram and Lee Ha-yeon

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