Continuing Saga
of Doosan Infracore

Heavy equipment maker registers 47% jump in H1 operating profit, thanks to huge sales increases in emerging markets

Doosan Infracore Co., a major affiliate of the Doosan Group, and a maker of heavy equipment, has had one of its best first halves in its short history, with sales of 2.75 trillion won on a consolidated basis, up 24 percent over the same period last year, the company reported during its investor relations session on July 21.
Operating profit for H1 was 316.1 billion won, up a whopping 47 percent YoY with normal profit of 181.6 billion won.
What is more surprising is the fact that the company's excellent performance came amid a sagging global market for heavy construction equipment.
The company explained that its business is up 55 percent in China and the sales of its products in other emerging markets such as the CIS, Central and South America, the Middle East and India, among others, were up 43 percent compared to the same period last year.
The 47 percent increase in operating profit was owed to huge growth in the sale of its high-priced products in China, high sales growth in emerging markets and cost cuts, which expanded profits.
The company's marketing strategy focusing on equipment with higher profit margins and management reforms have paid off handsomely. It has successfully pushed the sales of its most high-profit products in the northeastern and western regions of China, where natural resources exploration is in full swing.
The company's early efforts to secure big chunks of the heavy equipment market in emerging economies such as Central and South America also returned large dividends. The sales of its products in Latin America shot up 134 percent, in the CIS it rose 77 percent and in India and other Asian countries, the company had similarly large sales increases over the same period last year.
What surprised the company more is the fact that domestic sales were up 12 percent YoY, despite sluggish economic conditions at home, helped by a hefty increase in the sale of machining centers and other equipment in the shipbuilding and machinery sectors. Domestic sales of heavy diggers also registered a sharp increase, the company said.
The company projects its total sales at home and abroad will amount to 5.18 trillion won, up 21 percent YoY, by expanding sales in major markets around the world, led by heavy construction equipment and lathes with their competitive edge improved, and their continued exploration of new markets for its products.
The projections for operating and normal profit for this year are 500 billion won and 417.4 billion won, respectively, up 30 percent YoY due to continued cost cuts and improved profit margins, the company said.
The company held an exhibition of its 25 kinds of products jointly with its subsidiary, Doosan Kisang, in China on May 30-31 at the Yentai plant.
The exhibition of heavy equipment at the 2nd Doosan International Machine Tools Fair included 10 new types of heavy equipment to be introduced in China, nine other types of equipment and six additional varieties of heavy equipment brought to China from the head office, the company said, under the purpose of propelling the sales of its products to $300 million in China by 2012. The first exhibition took place in 2005.
Doosan Infracore set up its Chinese subsidiary in 2004 and has been operating its own plant capable of turning out 2,000 pieces of heavy equipment annually. The exhibition was aimed at producing and marketing all kinds of heavy equipment suitable for its Chinese customers as well providing a way to place itself as the top supplier of systems in China. nw

Vice Chairman Park Yong-man of Doosan Infracore Co.