Overseas Sales Growth Drives a Turnaround
Hit hard by the Korean government's ill-advised nuclear phase-out policy, Doosan Heavy Industries & Construction (DHIC) has been desperate to make a turnaround. The company announced on April 28 that it managed to turn a profit in the first quarter on a rebound in overseas sales.
DHIC posted 4,004.7 trillion won in sales, 372.1 billion won in operating profit and 248.1 billion won in net profit in the first quarter on a consolidated basis. Its sales rose slightly on year while operating profit and net profit soared by 315.6 billion won and 619.5 billion won, respectively.
The company’s performance is surprising when seen on a standalone basis. Its operating profit rose by 193.7 billion won to 58.5 billion won from a year earlier. Above all, its net profit rose by 459.4 billion won on year to 97 billion won, the first quarterly profit in 11 quarters. The company had not been able to yield a surplus over 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 rose 84 percent on year to 1,321.8 billion won. Accordingly, the company's order backlog also increased 4.4 percent to 14,407.6 billion won. In other words, the company has already secured about two and a half years of work.
Its orders include a four-stage seawater desalination plant project in Yanbu, Saudi Arabia. It will be built on a site 260 km north of Jeddah, Saudi Arabia's second city. The plant will use the reverse osmosis (RO) method. The company will be in charge of engineering, procurement and construction (EPC) and complete the plant by 2023. Upon completion, the plant will be able to produce 450,000 tons of water that can be used by about 1.5 million people a day.
Riding on the growth momentum, DHIC aims to win orders worth 8.6 trillion won in 2021, up more than 50 percent from the previous year. The value of the projects the company is certain to win amounts to about 2.5 trillion won. In addition, orders for service and equipment and materials coming to the company every year are around 2.7 trillion won per year. Projects which the company is close to landing are expected to reach its goal for 2021. It plans to expand overseas orders to more than 60 percent of its total sales by 2025.