Doosan’s restructuring on track with asset sales

Market expectations of Doosan Group‘s profit turnaround are growing, with the completion of the conglomerate’s planned asset sales Tuesday.

The Korean power equipment and construction giant successfully sold the heat recovery steam business unit of its construction arm Doosan Engineering & Construction for 300 billion won ($256 million) to General Electric. 

“This is the final deal that the group has pushed under its self-restructuring plan for the past two years,’’ a company spokesperson said.

Facing mounting losses due to the global economic downturn, its key affiliates -- including Doosan Heavy Industries & Construction, Doosan Infracore and Doosan E&C -- started auctioning off their profitable assets from 2014 for capital injection to lower the debt ratio.

The business units that Doosan sold varied from a fried chicken chain to armored vehicle and machine tool manufacturing unit.

Industry watchers said Doosan has raised around 3.6 trillion won from its asset sales, which will help it decrease its debt ratio reaching up to 276 percent in 2015.

In addition to the asset sales, Doosan conducted a workforce reduction at faltering Doosan Infracore, its construction equipment arm.

“The group is on track for a turnaround within this year,’’ the spokesperson said.

A profit turnaround is the top goal of Doosan’s new chairman Park Jeong-won who took the helm in March. The group, which posted a net loss of 1.7 trillion won last year, expects 1.5 trillion won profit this year, industry sources said.

“To make it a reality, Doosan has to be successful in its new duty-free business, which will kick off May 18,’’ said Kang sung-ah, a stock analyst of KB Investment & Securities.

More importantly, the group has to debut Doosan Bobcat, a holding company that controls U.S. machinery maker Bobcat, on the stock market within this year.

“We cannot mention the details of Doosan Bobcat’s IPO as yet, but the company is pushing for the project to be completed this year, ’’ the company official said.

By Seo Jee-yeon (jyseo@heraldcorp.com)