Doosan Corporation Reports Q1 Operating Profit of 90.9 Billion KRW, Down 74.4% YoY (Comprehensive)

Net Loss of 379.9 Billion KRW... Largest Deficit in 5 Quarters
Doosan Co., Ltd. "Restructuring Costs and COVID-19 Impact"

On the 27th, the Doosan Tower building in Dongdaemun-gu, Seoul, is visible as the government decided to inject 1.6 trillion won into Doosan Heavy Industries, which is experiencing financial difficulties, through the Korea Development Bank and the Export-Import Bank of Korea. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Ki-min Lee] Doosan Corporation, which is experiencing management difficulties, saw its performance plummet by 74.4% year-on-year due to restructuring costs in the first quarter of this year and the aftermath of the novel coronavirus disease (COVID-19).

Doosan Corporation announced on the 14th that its consolidated sales for the first quarter of this year were tentatively estimated at 4.4271 trillion KRW, and operating profit was 90.9 billion KRW.

Sales slightly decreased by 1.2% compared to the same period last year (4.6187 trillion KRW), but operating profit sharply dropped by 74.4% compared to 354.8 billion KRW in the first quarter of last year. Doosan’s operating profit for the first quarter of this year is less than one-third of the average forecast of 288.5 billion KRW by securities firms compiled by market research firm FnGuide.

In particular, it recorded a net loss of 379.9 billion KRW, turning to a deficit. In the first quarter of last year, there was a net profit of 54.9 billion KRW. This net loss is the largest deficit in five quarters since the net loss of 524.9 billion KRW in the fourth quarter of 2018.

The deterioration in Doosan Corporation’s performance is believed to be due to the impact of its consolidated subsidiary, Doosan Heavy Industries & Construction. Doosan Heavy Industries & Construction will announce its performance by submitting its quarterly report on the 15th. Although the figures have already been reflected in Doosan Corporation’s performance, the fact that Doosan Heavy Industries & Construction’s results are not disclosed together has led to analysis that it is due to massive losses.

Doosan Corporation explained in its performance materials on the day, “Despite solid sales from Doosan Corporation and Doosan Infracore, operating profit decreased year-on-year due to restructuring costs and COVID-19.”

However, based on separate financial statements showing Doosan Corporation’s own business performance, sales increased by 7.4% to 558.1 billion KRW, and operating profit rose by 47.8% to 60.6 billion KRW.

Doosan Corporation stated, “Sales in the first quarter of this year slightly decreased compared to the same period last year due to a decline in sales of the Motrol BG (Business Group) caused by COVID-19, but operating profit increased compared to the same period last year due to strong performance in the Electronics BG.”

It added, “In the second quarter of this year, sales of the Industrial Vehicle BG are expected to decline due to the impact of COVID-19, but the strong performance of the Electronics BG will continue, and the recovery of the front market of the Motrol BG will limit the sales decline in the first half of the year.”

Earlier, Doosan Infracore and Doosan Bobcat, subsidiaries of Doosan Heavy Industries & Construction and grandchild companies of Doosan Corporation, announced their first-quarter results on the 29th of last month. Doosan Infracore achieved sales of 2.0093 trillion KRW and operating profit of 181 billion KRW based on consolidated financial statements. Doosan Bobcat recorded sales of 1.0642 trillion KRW and operating profit of 86.8 billion KRW based on consolidated financial statements.

Doosan Fuel Cell and Doosan Solus, which were spun off in October last year, disclosed their first-quarter results on the 6th and 7th of this month, respectively. Doosan Fuel Cell’s sales in the first quarter of this year were 20.1 billion KRW, with an operating loss of 4.6 billion KRW. Doosan Solus recorded sales of 70.9 billion KRW and operating profit of 8.9 billion KRW. The performances of Doosan Fuel Cell and Doosan Solus are not reflected in Doosan Corporation’s consolidated financial statements.

Meanwhile, Doosan Corporation held a board meeting in the afternoon and decided not to pay dividends for the first quarter of this year. Doosan Corporation stated, “As COVID-19 spreads worldwide, the sudden tightening of domestic and international financial markets, which was unexpected, made it inevitable to reconsider the dividend policy planned at the time of disclosure. Considering the current domestic and international financial market situation, uncertainties in the future financial and real economy, and the need to reserve internal funds, we decided not to pay dividends.”

Prior to this, Doosan Group announced a self-rescue plan worth about 3 trillion KRW, stating that major shareholders will not receive dividends or bonuses and will return more than 30% of their salaries.

This content was produced with the assistance of AI translation services.