Doosan Heavy Industries & Construction finds a way out of the deficits in Saudi Arabia

A seawater desalination plant in Yanbu, Saudi Arabia

Doosan Heavy Industries & Construction (DHIC) was hit hard by the Korean government’s ill-advised nuclear exit policy and was eager to reverse the trend. The company announced on April 28 that it had made a profit in the first quarter on a rebound in overseas sales.

DHIC had first quarter consolidated sales of Won 4,004.7 trillion, operating income of Won 372.1 billion and net income of Won 248.1 billion. Revenue increased slightly year-over-year, while operating income and net income increased by 315.6 billion won and 619.5 billion won, respectively.

The company’s performance is surprising in individual cases. Operating income rose 193.7 billion won over the previous year to 58.5 billion won. In particular, net income increased by 459.4 billion won over the previous year to 97 billion won, the first quarterly profit in eleven quarters. The company had been unable to generate a surplus for the past two and a half years since the third quarter of 2018 due to the Moon Jae-in Administration’s nuclear phase-out policy.

The turnaround was led by overseas sales. In the first quarter of 2021, overseas sales increased 84 percent year over year to 1,321.8 billion won. As a result, the company’s backlog rose 4.4 percent to 14,407.6 billion won. In other words, the company has already secured two and a half years of work.

The orders include a four-stage project for the seawater desalination plant in Yanbu, Saudi Arabia. It is being built on a site 260 km north of Jeddah, the second largest city in Saudi Arabia. The system uses the reverse osmosis (RO) method. The company will be responsible for engineering, procurement and construction (EPC) and will complete the facility by 2023. When completed, the plant will be able to produce 450,000 tons of water that can be used by around 1.5 million people per day.

Due to the dynamic growth, DHIC aims to win orders worth 8.6 trillion won in 2021, an increase of more than 50 percent over the previous year. The value of the projects the company is certain to win is approximately 2.5 trillion won. Additionally, the orders for service, equipment, and materials that the company receives each year amount to approximately 2.7 trillion won per year. Projects that the company is about to land on are expected to meet its target for 2021. By 2025, incoming orders from overseas are to be expanded to more than 60 percent of total sales.