A manufacturing line for excavators at Doosan’s Chinese plant is seen in this file photo. / Courtesy of Doosan Group

Confidence revved, $26 billion revenue targeted

By Kim Yoo-chul

Doosan Group, the nation’s oldest industrial conglomerate, aims to continue its impressive corporate history with consistent increases in sales volume.

Last year was a watershed year, as Doosan Chairman Park Yong-hyun expanded production bases to target new markets and improved competitiveness in products and technologies.

Other achievements for 2011 include establishing a full line-up of production systems to engage the Chinese market, including an excavator factory in Suzhou, China; constructing an excavator plant in Brazil; new customers in the South American market; and a contract for construction of Korea’s first coal-to-gas power plant.

``We have no doubt that Doosan will report better earnings,’’ Park said.

The group has raised its revenue and sales targets. A complete departure from liquidity-related issues is helping it gain confidence and signs of economic recovery in key markets are also awakening idling demand for excavators, forklifts and other equipment used in heavy industries.

Two major previous risks were Bobcat and Doosan Engineering and Construction’s (E&C) liquidity. But those problems have been eased thanks to re-financing for the acquisition of Bobcat.

``Doosan has successfully solved such liquidity-related issues and we are considering buying more stocks of its affiliates as Doosan’s owner families are steadily showing firm willingness to keep the group’s financial soundness,’’ a senior fund manager from a U.S.-based investment bank based in Hong Kong told The Korea Times by telephone, Tuesday.

The manager stressed the conglomerate has seen an improvement in its cash flow, while the corporate debt ratio has been stabilizing from late last year.

He is not alone in maintaining a bullish position over Doosan shares. Its latest decision to reduce 700 billion won worth of company shares in its ownership, which will enhance shareholders’ value, has also been welcomed by market analysts.

``The decision is very rare. But the wider-than-expected share reduction reflects Doosan’s confidence to effectively handle the group-wide liquidity-related issues,’’ said Jeong Dae-ro, an analyst at Daewoo Securities, a leading domestic brokerage.

This year’s revenue target for Doosan Group is set at 29.1 trillion won or some $26 billion, up 11 percent last year. Also, the conglomerate plans to reap 2.2 trillion won in operating profit in 2012, an increase of 29 percent from a year earlier, according to the group.

Sustainable growth and preparedness are Park’s top initiatives for 2012. ``We are seeking organic growth not just to upgrade technologies or products,’’ said group spokesman Lee Jay-hyung.

That means Doosan is ready to acquire more technology patents, if necessary, and change its entire management system according to the situation, according to Lee.

Doosan Heavy Industries, the group’s top unit, plans to pursue revenue by pushing its desalination- and power generation-related projects.

Markets expect two previous acquisitions last year to significantly help the affiliate win more orders.

Doosan Heavy completed the acquisition of the Chennai works of Austrian power company AE&E and the deal secures a manufacturing base in the growing Indian market for power plant boilers.

``We expect Doosan Heavy to achieve 12.8 trillion worth of new orders this year from 10.8 trillion won it clinched last year. From India, Doosan is seen to reap 1.6 trillion won from boiler projects in Saudi Arabia,’’ said Jung Dong-ik, an analyst at Hanwha Securities, stating 83,000 won as its target for Doosan Heavy.

The brokerage separately stressed the conditions of Doosan Heavy’s affiliates, Doosan E&C and Doosan Infracore, are looking good in terms of curves for profit growth.

Doosan E&C announced that it will make up for last year’s heavy losses by reaping 2.5 trillion won in revenue and 140 billion won in operating profit for this year.

Infracore, Korea’s leading construction equipment maker said its project to build a plant for excavators is going smoothly. Amid the recovery in construction-related business sectors in Brazil, the top economy in South America, it plans to open the plant ahead of schedule, though the company spokesman declined to say anything more.