Doosan hits full stride in global expansion

By Kim Yoo-chul

Staff reporter

Doosan Group targets some 15 trillion won or $12 billion in overseas sales this year, accounting for about 60 percent out of the target 24.4 trillion won in total sales, a senior group spokesman Shin Dong-gyu said, Wednesday.

The group's reliance on foreign markets captures the group’s globalization effort.

The numbers only tell half the story.

Doosan has appointed foreign talent to key posts, while earnestly working on big M&A deals.

"Doosan Group is trying to find new earning engines that will cover developed to developing markets. As a business-to-business (B2B) focused company, it's quite natural to pay attention worldwide," Shin said.

Doosan's principal business lies in infrastructure support, which encompasses power plants, desalination, construction equipment and related services, and marine diesel engines.

Doosan's ongoing transformation efforts are well received by the markets.

Citigroup has maintained its bullish stance on Doosan Heavy Industries, Doosan Corp. and Doosan Infracore, saying that they are undervalued.

"The market is not fully recognizing their fundamental earnings improvement. Thus valuations for the three firms do not look stretched," Citi said in a note to clients.

Citi also expects the second quarter earnings of the three should provide positive fundamental improvement rather than any liquidity or financing-associated risks.

Doosan Heavy eyes record orders

Doosan Heavy Industries & Construction, the group’s plant-focused unit, has recently revised this year’s order target to a record 11.12 trillion won.

Of the total, 8.8 trillion won will come from overseas.

"The demand for power turbines, desalination, and nuclear plants is expected to maintain the current upswing mood amid signs of economic recovery. Doosan Heavy is positive about doubling its orders from last year's 5.62 trillion won," said Lee Jay-hyung, a Doosan Heavy spokesman.

Doosan Heavy is strengthening the relationships with overseas partners and doubling the efforts to secure core technologies through M&A.

The company has just signed a memorandum of understanding (MOU) with General Electric (GE) to develop steam turbine generators for advanced nuclear power plants.

Lee expects the partnership to help it get ahead in the next-generation power generation equipment development, saying the two will jointly develop 1,560-megawatt steam turbine generators by 2012 with the tentative aim to commercially produce the generators in 2015.

"We are trying to integrate the packaging production system from boilers and turbines to generators," said Lee.

Doosan Heavy acquired Czech-based Skoda Power, last year, to acquire key technologies in turbines. It also established Doosan Power Systems (DPS) February this year to boost the marketing power for the generator markets in Europe and North America.

"Our Vietnamese plant, which mainly produces desalination equipment, is also in the process of increasing efficiency during operations to cut costs," Lee said.

Doosan Infracore expanding overseas capacity

Doosan Infracore, with a product portfolio that includes conventional models of diesel engines, high-tech materials and core castings of hydraulic valves for excavators, aims to continue its overseas business momentum by creating synergy with its Bobcat units and expanding production capacity.

It has plans to construct diesel engine plants in China through a joint venture in association with Xuzhou Construction Machinery Group.

Doosan Infracore is also reviewing the possibility of jointly investing $100 million over the next four years in the facility, which will produce up to 50,000 diesel engine units with a displacement of 6 and 8 liters after completion in 2013.

"In addition to diesel engine projects, we are in the phase to build the second plant in Suzhou, China. Doosan has a plan to expand the annual capacity of excavators to 12,000 per year from an estimated 8,500 in 2011," said Jeong Kyong-O, a spokesman for Doosan Infracore.

Its steady attention to the construction equipment arena has even been successful in human resources.

Anthony Helsham is working as the chief executive of Doosan Infracore Construction Equipment.

Helsham arrives from a 30-year career at Volvo including serving as CEO of Volvo Construction Equipment (VCE) from 2000 to 2008, and head of its Korean operations from 1998 to 2000.