Doosan Group’s restructuring process, which was launched amid the liquidity crisis of Doosan Heavy Industries and Construction, the group’s flagship company, is predicted to be completed by year-end.
The group is likely to exit creditors’ management after almost one year of reorganizing, including disposing of key units like Doosan Infracore and Doosan E&C.
In return, the business group has been concentrating its capabilities and resources to strengthen its presence in hydrogen, battery, mobility, robots and other new businesses.
The future of Doosan Group hinges on how fast the group will grow in the new growth engine businesses down the road. The group has also a daunting task: how to improve the financial status of Doosan Heavy Industries and Construction, which is still heavily loaded with short-term borrowings.
In November, Doosan Heavy Industries and Construction conducted another capital raise of 1.5 trillion won. Of that, 700 billion won will be used to pay down debts.
The company will still have 200 billion won in debt. The business group plans to terminate a three-year debt agreement with its creditors in one-and-half years.
Doosan Business Group has been restructuring its operations since last year. The business group reorganized its structure into a simpler one by disposing of subsidiaries and in-house mergers.
Under the umbrella of Doosan Heavy Industries & Construction, the business group’s flagship companies, Doosan Fuel Cell and Doosan Bobcat, will be nurtured as eco-friendly companies.
As Doosan Heavy Industries & Construction faced a liquidity crisis, caused by the government’s policy of weaning the nation off nuclear power and other financial difficulties, Doosan Business Group began to conduct an organizational reshuffle in the second half of last year.
The business group had put on the block not only its real estate but also Neoplux, Doosan Solus, Mottrol BG and a split sale of Doosan Infracore.
In the course of restructuring, the business group’s governance was simplified into a format of Doosan Group Chairman Park Jeong-won and group owner family members’ owning Doosan Corp., which controls Doosan Heavy Industries & Construction, which is the parent company of Fuel Cell and Doosan Bobcat.
The noteworthy aspect with regard to the restructuring is that Doosan Heavy Industries & Construction has two subsidiaries - Dusan Fuel Cell, a hydrogen fuel cell maker, and Bobcat, the global No. 1 compact equipment maker.
Doosan Heavy Industries & Construction received a 15.6 percent stake in Doosan Fuel Cell from Doosan Corp.’s largest shareholders last December. It also saw an investment of a 14.7 percent stake, owned by Doosan Corp.
The steps made Doosan Heavy Industries & Construction the biggest shareholder of Doosan Fuel Cell.
The reason for making Doosan Fuel Cell one of Doosan Heavy Industries & Construction’s subsidiaries is that the latter aims to make the former one of its future growth engines.
The government’s policy of weaning the nation off nuclear power and decarbonizing industries buffeted Doosan Heavy Industries & Construction the severest, which is badly needing new businesses.
Doosan Group has created new growth momentum by handing Doosan Fuel Cell, specializing in the hydrogen business, a future eco-friendly sector, to Doosan Heavy Industries & Construction.
Doosan Heavy Industries & Construction plans to max out the synergetic effects the company will have in exploring the eco-friendly business along with Doosan Fuel Cell.
Currently, Doosan Heavy Industries & Construction is building the nation’s first hydrogen liquefaction plant at its headquarters in Changwon, and the company is participating in green hydrogen production tasks using renewable energies on Jeju Island and in Donghae.
Doosan Fuel Cell is stepping on the gas to secure an upper hand in the power generation hydrogen fuel cell market by supplying a 50MW fuel cell systems to a byproduct hydrogen power plant in Daesan.
Doosan Heavy Industries & Construction plans to build an eco-friendly power generation line-up by making the most of fuel cell power generation technologies, owned by Doosan Fuel Cell.
It is also noteworthy that Doosan Bobcat, which was once under the umbrella of Doosan Infracore, is now under the banner of Doosan Heavy Industries & Construction.
Doosan Bobcat, the world’s No. 1 compact equipment maker, is expected to serve as Doosan Group’s cash cow company. Doosan Group suffered difficulties, caused by its sagging business performance, shortly after Doosan Bobcat was acquired by the group for about 6 trillion won in 2007.
Doosan Bobcat has grown into a lucrative cash generating company which logged about 400 billion won in operating profit annually since 2015 on a consolidated basis.
In particular, the company chalked up 171.3 billion won in 2021 Q1 operating profit, the best-ever one in 10 years.
Doosan Bobcat made Doosan Industrial Vehicle, which was spun off from Doosan Corp., into one of its subsidiaries. Doosan Industrial Vehicle is the Korean company mass producing forklifts.
The company, which commands a 54 percent share in the Korean forklift market, shows growth at an annual average rate of about 7 percent in the past five years.
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