By Kim Yoo-chul
Doosan Group's key compact equipment manufacturing unit, Bobcat, is suffering from growing losses due to the economic recession in Europe.
DHEL, the holding company in Europe suffered 16.9 billion won in net losses in Europe during the first quarter of this year, and DII, the holding company in the US suffered 16.6 billion won in the U.S. during the same period, data from the Financial Supervisory Service (FSS) showed Sunday.
Bobcat’s net loss from its business in Europe and the U.S. for the quarter ended March 31 widened year-on-year.
In 2007, Doosan bought three Ingersoll Rand-owned business units including Bobcat for about $4.9 billion, the largest international acquisition by a South Korean company.
Clark Equipment, a compact equipment manufacturer affiliated with Doosan, reported 207 billion won in net profit on annual revenue of 2.61 trillion won last year. But its net profit during the first three months of this year dropped by 34 percent to 38.1 billion won on revenue of 575 billion.
In 2011, DII borrowed $750 million from the nation’s leading banks including the Korea Development Bank to complete the acquision of Bobcat. Doosan has been paying over 40 billion won in interest only.
Doosan’s other overseas affiliates, Doosan Holdings France and Doosan Benelux, also reported net losses of 11.2 billion won and 10 billion won, respectively, during the first quarter.
DHEL borrowed a total of $970 million from Korea-based banks to support Bobcat’s U.S. business.
“The financial burden is the biggest headache for Bobcat’s U.S. business,” said an analyst at Woori Investment, asking not to be named.