STX Offshore & Shipbuilding Co., the nation‘s fourth-largest shipbuilder, announced yesterday that it won contracts for four ships worth a total of $250 million this month.
STX said that the company closed two deals with a Greek and a Singaporean company, respectively, to build one bulk carrier each. The other two contracts are with an unidentified Asian company to deliver two large-scale special purpose ships.
So far this year, the company said that it has secured contracts for 19 commercial ships worth $710 million
2010년 4월 18일 일요일
I30 hatchback tows Hyundai Europe sales
More than 500,000 units of Hyundai Motor Co.’s compact hatchback i30 have been sold since its launch in July 2007, the company said on Friday.
The i30 is the company’s first vehicle designed specifically for overseas markets to break cumulative sales figure of 500,000.
The car is designed to target European markets, and is currently being produced in Korea, China and the Czech Republic. Of the about 510,000 units of the vehicle sold worldwide, more than 86 percent were sold outside of Korea.
Hyundai Europe vice president Allan Rushforth said in a statement that the company will keep making improvements to the i30 in order to further increase the vehicle’s sales in the European market.
With the i30, Hyundai appears to have hit the right chord with European motorists.
According to Hyundai, the i30 came out on top in the customer satisfaction survey conducted by the U.K.-based automotive publication Auto Express. The survey asked 23,000 U.K. motorists questions on a number of categories including reliability, quality and fuel economy to rank vehicles.
The i30, the first Korean vehicle to top the list, was followed by the Jaguar XF and the Skoda Octovia in this year’s survey.
Aided by the popularity of the i30 and the other i-series vehicles -- the i10 and i20 – Hyundai’s monthly sales in the United Kingdom rose to a record high of 15,429 units in March, the company said.
In addition to the U.K. market, Hyundai has been performing well in the wider European market so far this year.
According to the European Automobile Manufacturers’ Association, Hyundai’s first quarter sales in the European Union and in the countries belonging to the European Free Trade Association increased by 24.2 percent from the same period last year.
With the increase, the carmaker sold about 100,800 units in that market, raising its market share to 2.7 percent from the 2.4 percent recorded for the same period last year.
Along with Hyundai, its sister carmaker Kia Motors Corp. saw its sales for the first three months of the year increase by a slightly higher rate of 25.9 percent over the same period.
The sales increase rates recorded by Hyundai and Kia are respectively the sixth and the fifth highest they have recorded.
Renault Group’s Dacia brand took the top spot in terms of sales increase rate, 59.1 percent, followed by Land Rover, the first quarter sales of which rose by 42.3 percent from a year earlier.
The i30 is the company’s first vehicle designed specifically for overseas markets to break cumulative sales figure of 500,000.
The car is designed to target European markets, and is currently being produced in Korea, China and the Czech Republic. Of the about 510,000 units of the vehicle sold worldwide, more than 86 percent were sold outside of Korea.
Hyundai Europe vice president Allan Rushforth said in a statement that the company will keep making improvements to the i30 in order to further increase the vehicle’s sales in the European market.
With the i30, Hyundai appears to have hit the right chord with European motorists.
According to Hyundai, the i30 came out on top in the customer satisfaction survey conducted by the U.K.-based automotive publication Auto Express. The survey asked 23,000 U.K. motorists questions on a number of categories including reliability, quality and fuel economy to rank vehicles.
The i30, the first Korean vehicle to top the list, was followed by the Jaguar XF and the Skoda Octovia in this year’s survey.
Aided by the popularity of the i30 and the other i-series vehicles -- the i10 and i20 – Hyundai’s monthly sales in the United Kingdom rose to a record high of 15,429 units in March, the company said.
In addition to the U.K. market, Hyundai has been performing well in the wider European market so far this year.
According to the European Automobile Manufacturers’ Association, Hyundai’s first quarter sales in the European Union and in the countries belonging to the European Free Trade Association increased by 24.2 percent from the same period last year.
With the increase, the carmaker sold about 100,800 units in that market, raising its market share to 2.7 percent from the 2.4 percent recorded for the same period last year.
Along with Hyundai, its sister carmaker Kia Motors Corp. saw its sales for the first three months of the year increase by a slightly higher rate of 25.9 percent over the same period.
The sales increase rates recorded by Hyundai and Kia are respectively the sixth and the fifth highest they have recorded.
Renault Group’s Dacia brand took the top spot in terms of sales increase rate, 59.1 percent, followed by Land Rover, the first quarter sales of which rose by 42.3 percent from a year earlier.
Doosan Heavy flexes muscle in global atomic power market
Korea stunned the global nuclear power industry when the newcomer to the world market fetched a $20 billion deal to build reactors in the United Arab Emirates late last year.
One of the firms behind the achievement is Doosan Heavy Industries Co., a leader in the technology required to manufacture nuclear reactors and other key equipment.
“We could proudly say Doosan has the global competitiveness in supplying nuclear power facilities since it is among the rare companies to be equipped with the ability to make the material supplies and one that has the technologies,” said company vice president Kim Tae-woo.
Inside of Doosan Heavy Industries Co.’s factory in Changwon, South Gyeongsang Province.
The company aims to win global orders worth $18 billion by 2015 as the demand for atomic power generation is expected to surge as an alternative to fossil fuel based energies.
Doosan is already a global leading player in power generation and desalination facilities.
The company claims to be one of the few firms across the world that has an integrated productivity system which could control all execution stages from material selection to final product development.
In the past two decades it has supplied about 20 nuclear reactors in Korea. It has also provided nuclear power facilities for 12 different nuclear plants in the United States, China and Japan from 1997-2008.
According to the World Nuclear Association, some 430 more nuclear reactors are projected to be built by 2030. Currently, about 430 nuclear reactors are in operation in 31 countries.
A nuclear reactor produced by Doosan Doosan Heavy Industries Co.
Doosan said the firm expects the additional nuclear reactors to create a $1.08 trillion market in the next 20 years.
“Although many nuclear power facility manufacturing companies have experienced downturns due to the sluggish market which has continued for the past three decades, Doosan has accumulated its technology and experience by continuously building domestic nuclear power plants,” Kim said.
The country’s mid-sized conglomerate focusing on heavy equipment was part of a consortium led by Korea Electric Power Corp. which signed a $20 billion deal to construct four 1.4 million-kilowatt nuclear power reactors in the United Arab Emirates by 2020.
Seoul officials project the deal to generate an additional $20 billion contract for operation and maintenance for 60 years.
The government estimates that the contract will create direct exports amounting to $20 billion -- equivalent to a 1 million-unit shipment of Hyundai NF Sonata sedans -- and that the deal will offer 110,000 new jobs.
Korea is a relative newcomer to the international nuclear market; however, it is recognized for its cost-effectiveness, safety, technological know-how and quick construction.
The country also has the world’s sixth largest atomic generation capacity. It stood at 93.3 percent as of 2008, 14 percentage point higher than the global average of 79.4 percent.
Park Gee-won, president of Doosan Heavy, has previously said that the firm aims to win $18 billion worth of global orders and reach sales of 17 trillion won with an operating profit margin of 10 percent by 2015.
Doosan has also built and delivered a nuclear reactor to a power plant in China for the first time in February last year, marking its first sale of a nuclear reactor overseas.
Since then, the company has won a $240 million deal last September to supply power plant equipment to Saudi Arabia and a landmark nuclear deal in UAE late last year to build the nuclear power plants within the next 10 years.
The firm then moved on to sign a $350 million deal to provide equipment for a power facility in Egypt in February and won a $120 million power plant order in New Caledonia.
Being the only company in Korea which specializes in power plants, it also focuses on making conventional power plants more environmentally friendly.
It is directing the development of a next-generation power plant technology called the Integrated Gasification Combined Cycle -- creating gas from coal.
Doosan officials celebrate the completion of new nuclear reactor equipment.
As part of the effort, Doosan Heavy’s subsidiary Doosan Babcock is taking charge of a government-funded project called OxyCoal U.K. in the United Kingdom to develop competitive oxyfuel technology suitable for full-scale plant applications.
Another deal with Korea South East Power Co. asks Doosan to design and install a fuel-saving boiler facility at the power plant in Yeosu, South Jeolla Province, by 2011.
The firm is also in the process of making fuel cells, a type called the molten carbonate fuel cell, which has the capacity of producing electricity for 200 households. It aims to commercialize it by 2012.
Proving to be an outcome of the company’s ongoing efforts, it has been ranked fourth on the list of world’s top 40 firms in 2009, according to A.T. Kearney’s 2009 Global Champions Report, released by Business Week magazine.
Doosan was noted for its foresight and agility in buying new technologies and for maintaining a consistent corporate culture that focuses on high performance.
One of the firms behind the achievement is Doosan Heavy Industries Co., a leader in the technology required to manufacture nuclear reactors and other key equipment.
“We could proudly say Doosan has the global competitiveness in supplying nuclear power facilities since it is among the rare companies to be equipped with the ability to make the material supplies and one that has the technologies,” said company vice president Kim Tae-woo.
Inside of Doosan Heavy Industries Co.’s factory in Changwon, South Gyeongsang Province.
The company aims to win global orders worth $18 billion by 2015 as the demand for atomic power generation is expected to surge as an alternative to fossil fuel based energies.
Doosan is already a global leading player in power generation and desalination facilities.
The company claims to be one of the few firms across the world that has an integrated productivity system which could control all execution stages from material selection to final product development.
In the past two decades it has supplied about 20 nuclear reactors in Korea. It has also provided nuclear power facilities for 12 different nuclear plants in the United States, China and Japan from 1997-2008.
According to the World Nuclear Association, some 430 more nuclear reactors are projected to be built by 2030. Currently, about 430 nuclear reactors are in operation in 31 countries.
A nuclear reactor produced by Doosan Doosan Heavy Industries Co.
Doosan said the firm expects the additional nuclear reactors to create a $1.08 trillion market in the next 20 years.
“Although many nuclear power facility manufacturing companies have experienced downturns due to the sluggish market which has continued for the past three decades, Doosan has accumulated its technology and experience by continuously building domestic nuclear power plants,” Kim said.
The country’s mid-sized conglomerate focusing on heavy equipment was part of a consortium led by Korea Electric Power Corp. which signed a $20 billion deal to construct four 1.4 million-kilowatt nuclear power reactors in the United Arab Emirates by 2020.
Seoul officials project the deal to generate an additional $20 billion contract for operation and maintenance for 60 years.
The government estimates that the contract will create direct exports amounting to $20 billion -- equivalent to a 1 million-unit shipment of Hyundai NF Sonata sedans -- and that the deal will offer 110,000 new jobs.
Korea is a relative newcomer to the international nuclear market; however, it is recognized for its cost-effectiveness, safety, technological know-how and quick construction.
The country also has the world’s sixth largest atomic generation capacity. It stood at 93.3 percent as of 2008, 14 percentage point higher than the global average of 79.4 percent.
Park Gee-won, president of Doosan Heavy, has previously said that the firm aims to win $18 billion worth of global orders and reach sales of 17 trillion won with an operating profit margin of 10 percent by 2015.
Doosan has also built and delivered a nuclear reactor to a power plant in China for the first time in February last year, marking its first sale of a nuclear reactor overseas.
Since then, the company has won a $240 million deal last September to supply power plant equipment to Saudi Arabia and a landmark nuclear deal in UAE late last year to build the nuclear power plants within the next 10 years.
The firm then moved on to sign a $350 million deal to provide equipment for a power facility in Egypt in February and won a $120 million power plant order in New Caledonia.
Being the only company in Korea which specializes in power plants, it also focuses on making conventional power plants more environmentally friendly.
It is directing the development of a next-generation power plant technology called the Integrated Gasification Combined Cycle -- creating gas from coal.
Doosan officials celebrate the completion of new nuclear reactor equipment.
As part of the effort, Doosan Heavy’s subsidiary Doosan Babcock is taking charge of a government-funded project called OxyCoal U.K. in the United Kingdom to develop competitive oxyfuel technology suitable for full-scale plant applications.
Another deal with Korea South East Power Co. asks Doosan to design and install a fuel-saving boiler facility at the power plant in Yeosu, South Jeolla Province, by 2011.
The firm is also in the process of making fuel cells, a type called the molten carbonate fuel cell, which has the capacity of producing electricity for 200 households. It aims to commercialize it by 2012.
Proving to be an outcome of the company’s ongoing efforts, it has been ranked fourth on the list of world’s top 40 firms in 2009, according to A.T. Kearney’s 2009 Global Champions Report, released by Business Week magazine.
Doosan was noted for its foresight and agility in buying new technologies and for maintaining a consistent corporate culture that focuses on high performance.
2010년 4월 14일 수요일
Moody’s upgrades Korea rating to A1
Moody’s upgrades Korea rating to A1
Moody’s Investors Service has changed Korea’s government bond ratings to A1 from A2 in three years, citing the Korean economy’s “exceptional” resilience to the global crisis.
The ratings agency maintained the outlook for Korea at “stable.”
“The change has been prompted by Korea’s demonstration of an exceptional level of economic resilience to the global crisis, while containing the government’s budget deficit,” Moody’s senior vice president Tom Byrne said in an e-mailed statement.
The ratings agency said the Asia’s fourth-largest economy was responding quickly to the improving global economic environment.
The government’s supportive policy measures also helped sustain economic growth, Moody’s said.
“The resiliency of Korea’s economy was evident in its ability to withstand relatively well the concretionary forces which emanated from the global recession,” Byrne said.
Before the announcement from Moody’s today, some observers had expected that Moody’s would maintain Korea’s credit rating at A2 due to lingering concerns over the large proportion of short-term external debts in the banking sector.
However, Moody’s said the vulnerabilities coming from the banking industry’s reliance on external debts are “being addressed and reduced.”
Despite the upgrade, Byrne said that the eventual exit from the accommodative monetary policy by the Bank of Korea could slow growth momentum in the next one or two years.
The ratings agency also warned that Korea will face demographic challenges in the next 10-15 years.
It pointed out two major risks that could affect future ratings – one, the snowballing public-sector debt and the other, the risk posed by North Korea.
However, concerns over possibilities of military provocations can be counterbalanced by “South Korea’s robust alliance with the United States and shared interests among regional powers for stability on the peninsula,” it said.
The Korean economy averted a recession and pulled off the 0.2 percent growth in 2009, while most of the global regions were suffering from a recession.
The central bank recently revised the 2010 growth forecast for Korea to 5.2 percent from a previous 4.6 percent, citing robust exports and improving domestic demand.
Korean stocks sharply rose after Moody’s upgraded the country’s bond ratings to A1 and maintained a stable outlook.
Moody’s Investors Service has changed Korea’s government bond ratings to A1 from A2 in three years, citing the Korean economy’s “exceptional” resilience to the global crisis.
“The change has been prompted by Korea’s demonstration of an exceptional level of economic resilience to the global crisis, while containing the government’s budget deficit,” Moody’s senior vice president Tom Byrne said in an e-mailed statement.
The ratings agency said the Asia’s fourth-largest economy was responding quickly to the improving global economic environment.
The government’s supportive policy measures also helped sustain economic growth, Moody’s said.
“The resiliency of Korea’s economy was evident in its ability to withstand relatively well the concretionary forces which emanated from the global recession,” Byrne said.
Before the announcement from Moody’s today, some observers had expected that Moody’s would maintain Korea’s credit rating at A2 due to lingering concerns over the large proportion of short-term external debts in the banking sector.
However, Moody’s said the vulnerabilities coming from the banking industry’s reliance on external debts are “being addressed and reduced.”
Despite the upgrade, Byrne said that the eventual exit from the accommodative monetary policy by the Bank of Korea could slow growth momentum in the next one or two years.
The ratings agency also warned that Korea will face demographic challenges in the next 10-15 years.
It pointed out two major risks that could affect future ratings – one, the snowballing public-sector debt and the other, the risk posed by North Korea.
However, concerns over possibilities of military provocations can be counterbalanced by “South Korea’s robust alliance with the United States and shared interests among regional powers for stability on the peninsula,” it said.
The Korean economy averted a recession and pulled off the 0.2 percent growth in 2009, while most of the global regions were suffering from a recession.
The central bank recently revised the 2010 growth forecast for Korea to 5.2 percent from a previous 4.6 percent, citing robust exports and improving domestic demand.
Korean stocks sharply rose after Moody’s upgraded the country’s bond ratings to A1 and maintained a stable outlook.
Bodies of missing sailors seen in sunken warship(천안함)
Bodies of missing sailors seen in sunken warship(천안함)
Salvage workers saw several bodies inside a sunken naval ship on Thursday when they entered the stern of the 1,200-ton Cheonan corvette to install water pumps after a crane raised it from the sea.
Efforts to locate the 44 missing crew and salvage the wreckage of the 1,200-ton Cheonan has been impeded by high winds, a swift current and other bad weather conditions, the report said.
The Joint Chiefs of Staff said a huge naval recovery-crane started hoisting the stern, where most of the missing sailors are believed trapped. Footage by SBS television showed the stern's upper part appearing on the sea surface, workers taking on the deck and using hoses to pull water out of it and lighten the weight.
The report said fully retrieving the stern, moving it onto a barge and searching for the missing crew are expected to take 11 hours. The stern is to be moved to a naval base to investigate the cause of the explosion while the rest of the ship is to be salvaged as early as next week, AP quoted JCS officials as saying.
Fifty-eight crew members were rescued shortly after the Cheonan split into two after exploding March 26 during a routine patrol. Divers have recovered two bodies.
No cause has been determined. There has been some suspicion but no confirmation of North Korean involvement in the sinking, which occurred near the two Koreas' disputed western sea border -- a scene of three bloody inter-Korean naval battles, the report said.
Salvage workers saw several bodies inside a sunken naval ship on Thursday when they entered the stern of the 1,200-ton Cheonan corvette to install water pumps after a crane raised it from the sea.
It is believed that many of the vessel's 44 missing crew members have been trapped inside since it sank last month near the North Korean border.
South Korea began lifting the vessel on Thursday in waters near the tense border with North Korea, about three weeks after the ship went down following a mysterious explosion on board, according to AP.
Efforts to locate the 44 missing crew and salvage the wreckage of the 1,200-ton Cheonan has been impeded by high winds, a swift current and other bad weather conditions, the report said.
The Joint Chiefs of Staff said a huge naval recovery-crane started hoisting the stern, where most of the missing sailors are believed trapped. Footage by SBS television showed the stern's upper part appearing on the sea surface, workers taking on the deck and using hoses to pull water out of it and lighten the weight.
The report said fully retrieving the stern, moving it onto a barge and searching for the missing crew are expected to take 11 hours. The stern is to be moved to a naval base to investigate the cause of the explosion while the rest of the ship is to be salvaged as early as next week, AP quoted JCS officials as saying.
Fifty-eight crew members were rescued shortly after the Cheonan split into two after exploding March 26 during a routine patrol. Divers have recovered two bodies.
No cause has been determined. There has been some suspicion but no confirmation of North Korean involvement in the sinking, which occurred near the two Koreas' disputed western sea border -- a scene of three bloody inter-Korean naval battles, the report said.
2010년 4월 12일 월요일
Doosan Uses Global Crisis as Chance to Get Ahead
The global economy is struggling, with Korea Inc. not exempt from its effects.
Korean firms are doing what they can to keep afloat but Doosan Group is trying to get ahead of the pack.
The conglomerate, focused on heavy industry, has preemptively been engaged in boosting its liquidity even before the full brunt of the global economic meltdown came Korea's way.
After initial difficulty that in the summer months forced the group to pump $1 billion into units which last year borrowed heavily to take over companies of U.S.-based Ingersoll Rand, it appears to be standing on firmer ground.
"It is highly unlikely Doosan Group will see a serious liquidity problem," research firm UBS said in a memo to clients. Shares of Doosan Group rose 3.65 percent to end 70,900 won on Korea's main bourse, last week.
Liquidity Is Everything
A month ago, Doosan said it will sell 100 percent of its packaging business unit to a private equity fund, MBK Partners, for 400 billion won by the end of this year, to solidify its financial structure.
Doosan said it will be able to settle 199.2 billion won in debt and secure 200.8 billion won in cash from the deal to sell Techpack ― Korea's No. 1 packaging company by market share.
"We are still positive about Doosan Group. It has already sold its packaging unit and is forecast to continue restructuring efforts to lower leverage by selling non-core assets," Citi Group said in a research finding.
"Yes, we are positive about the decision. Doosan's debt ratio will lower to 46 percent, while its net borrowings are expected to decrease 482.4 billion won from 882.4 billion won," Hyundai Securities said, adding the brokerage is maintaining a "positive outlook" for the group.
As another "consistent" move for a better corporate financial structure, Doosan now plans to separate its defense business operations and make them an independent entity by the end of 2008.
Doosan officials say the "Doosan DST," which will have an initial capital of 396.9 billion won with debts of 146.3 billion won, will only focus on the defense sector, to manufacture armored vehicles and other weapons systems.
But industry officials and even Doosan insiders say the very recent decision is a pre-emptive measure for the group to spur its ongoing restructuring efforts for more cash.
"As far as I know, Doosan Infracore ― the group's heavy equipment unit ― will completely drop the defense business within the first half of next year. Doosan will secure a maximum of 600 billion won by selling the defense unit," a high-ranking industry source told The Korea Times.
"Deciding to sell a business unit can be one of the hardest decisions chief executives have to make. Some cannot bring themselves to wield the axe. But a growing body of evidence suggests that smart sellers can earn impressive returns," another industry source said, citing Doosan's Ingersoll timing was good.
Meanwhile, Doosan Infracore is known to have sold 22 percent of its stake in Korea Aerospace Industries and properties in Incheon, Gyeonggi Province for similar purposes. Doosan Engine, an unlisted unit of Doosan Heavy, is reviewing the possibility of selling its 10.15 percent share in STX.
"Our top priority is to strengthen investors' confidence. Some are painting a negative picture of our Bobcat business. But such worries are rather exaggerated," spokesman Shin Dong-gyu said.
Analysts say the restructuring efforts have well echoed previous promises, after the group gave up its bid for a stake in Daewoo Shipbuilding & Marine Engineering.
"Our decision not to bid for Daewoo Shipbuilding has freed us to spend money to improve debt-equity ratios at overseas units," according to Shin.
Hanwha Group, selected as preferred negotiator, which has seen stocks tumble as markets fear that their buyout plan comes at a time when lenders tighten their purse strings, making the firm raise a bigger portion of funding.
But concerns are still high over the future of its Bobcat business.
Analysts say signs of deterioration of machinery demand in the U.S. and Europe and a weakening local currency hit by the global economic slowdown will burden the group and Infracore.
In the third quarter, Doosan Infracore reported a net loss of 43 billion won, as a weaker won inflated its financial burden on overseas debts. In the previous quarter, the company reported a net profit of 47.2 billion won.
Another spokesman Jeong Kyong-O said Korea's won has dropped nearly 30 percent this year against the greenback, inflating the book value of Doosan Infracore's dollar-denominated debt in local currency terms.
"We will push very intensive restructuring measures for our Bobcat business as planned," Jeong said.
According to Doosan officials, the group is pursuing restructuring of more than 70 Bobcat construction vehicle factories around the world to improve labor productivity and cut fixed costs.
Its global restructuring is expected to help raise Bobcat's sales by $110 million to $150 million.
Doosan Holdings Europe and Doosan Infracore International had borrowed $2.9 billion to fund a $4.9 billion purchase last year of Ingersoll Rand's three business units ― Bobcat, Ingersoll Rand Utility Equipment and Ingersoll Rand Attachments.
The deal still is the biggest overseas acquisition by a Korean firm.
Holding Company System
Doosan Group is on the right track to transform to a holding company system ― another key catalyst for Doosan for greater investors' trust.
Doosan officials say dropping its packaging business has also been in line with efforts to transform to a holding company system.
"Investors are also concerned with the group's management structure. We are easing worries over management by departing from the group's control structure, based on a cross-shareholding scheme," Shin said.
Doosan announced a plan for a holding company system in January 2006.
For measures, the group separated its magazine and printing businesses, while it spun off bio-related business in December last year. In November 2006, Doosan dropped its "Kimchi" business.
The cross-shareholding system in South Korea has been accused of being the main means used by "chaebol" owners to exercise control over entire conglomerates despite their small interests.
Under the system, subsidiaries' trouble often has an adverse effect on other subsidiaries and makes them vulnerable to hostile takeovers.
It has also been cited as a major factor for the under-valuation of South Korean companies.
Doosan was fined by the nation's anti-trust watchdog in 2007 as the group's two subsidiaries ― Doosan Industrial Development and Doosan Heavy & Construction ― unfairly supported other units in the group, including the consulting arm Neoplux, by paying higher purchase prices.
The two subsidiaries were also found to have paid interest on loans taken out by other units on behalf of them.
As well as restructuring for increased corporate transparency and to soothe investors' worries over the future of the group, Doosan plans to continue its leadership in the construction equipment sector with the biggest research center in Korea.
Last week, Doosan Infracore completed a 13 billion won machine tools research center to secure a bridgehead in the machine tools market when the economy recovers.
It also said it is targeting 2.2 trillion in annual machine tools sales by 2012. Doosan Infracore ― the world's No. 7 construction equipment maker by sales ― expects to achieve this year's machine tools sales target of 1.089 trillion won, up 18 percent from a year ago.
Infracore, which earns more than 40 percent of its total sales in construction equipment, also produces forklifts, excavators, engines and defense products such as armored vehicles and antiaircraft guns.
Doosan Heavy Industries & Construction owns 39 percent of Infracore.
"We are on a bumpy road for the time being. But our shown and ongoing consistencies towards increased transparency and financial structure will finally work," Shin said.
Korean firms are doing what they can to keep afloat but Doosan Group is trying to get ahead of the pack.
The conglomerate, focused on heavy industry, has preemptively been engaged in boosting its liquidity even before the full brunt of the global economic meltdown came Korea's way.
After initial difficulty that in the summer months forced the group to pump $1 billion into units which last year borrowed heavily to take over companies of U.S.-based Ingersoll Rand, it appears to be standing on firmer ground.
"It is highly unlikely Doosan Group will see a serious liquidity problem," research firm UBS said in a memo to clients. Shares of Doosan Group rose 3.65 percent to end 70,900 won on Korea's main bourse, last week.
Liquidity Is EverythingBig corporations are trying to secure liquidity, seeing tougher times ahead.
Doosan's efforts to lower debts and boost liquidity have been well under way.
A month ago, Doosan said it will sell 100 percent of its packaging business unit to a private equity fund, MBK Partners, for 400 billion won by the end of this year, to solidify its financial structure.
Doosan said it will be able to settle 199.2 billion won in debt and secure 200.8 billion won in cash from the deal to sell Techpack ― Korea's No. 1 packaging company by market share.
"We are still positive about Doosan Group. It has already sold its packaging unit and is forecast to continue restructuring efforts to lower leverage by selling non-core assets," Citi Group said in a research finding.
"Yes, we are positive about the decision. Doosan's debt ratio will lower to 46 percent, while its net borrowings are expected to decrease 482.4 billion won from 882.4 billion won," Hyundai Securities said, adding the brokerage is maintaining a "positive outlook" for the group.
As another "consistent" move for a better corporate financial structure, Doosan now plans to separate its defense business operations and make them an independent entity by the end of 2008.
Doosan officials say the "Doosan DST," which will have an initial capital of 396.9 billion won with debts of 146.3 billion won, will only focus on the defense sector, to manufacture armored vehicles and other weapons systems.
But industry officials and even Doosan insiders say the very recent decision is a pre-emptive measure for the group to spur its ongoing restructuring efforts for more cash.
"As far as I know, Doosan Infracore ― the group's heavy equipment unit ― will completely drop the defense business within the first half of next year. Doosan will secure a maximum of 600 billion won by selling the defense unit," a high-ranking industry source told The Korea Times.
"Deciding to sell a business unit can be one of the hardest decisions chief executives have to make. Some cannot bring themselves to wield the axe. But a growing body of evidence suggests that smart sellers can earn impressive returns," another industry source said, citing Doosan's Ingersoll timing was good.
Meanwhile, Doosan Infracore is known to have sold 22 percent of its stake in Korea Aerospace Industries and properties in Incheon, Gyeonggi Province for similar purposes. Doosan Engine, an unlisted unit of Doosan Heavy, is reviewing the possibility of selling its 10.15 percent share in STX.
"Our top priority is to strengthen investors' confidence. Some are painting a negative picture of our Bobcat business. But such worries are rather exaggerated," spokesman Shin Dong-gyu said.
Analysts say the restructuring efforts have well echoed previous promises, after the group gave up its bid for a stake in Daewoo Shipbuilding & Marine Engineering.
"Our decision not to bid for Daewoo Shipbuilding has freed us to spend money to improve debt-equity ratios at overseas units," according to Shin.
Hanwha Group, selected as preferred negotiator, which has seen stocks tumble as markets fear that their buyout plan comes at a time when lenders tighten their purse strings, making the firm raise a bigger portion of funding.
But concerns are still high over the future of its Bobcat business.
Analysts say signs of deterioration of machinery demand in the U.S. and Europe and a weakening local currency hit by the global economic slowdown will burden the group and Infracore.
In the third quarter, Doosan Infracore reported a net loss of 43 billion won, as a weaker won inflated its financial burden on overseas debts. In the previous quarter, the company reported a net profit of 47.2 billion won.
Another spokesman Jeong Kyong-O said Korea's won has dropped nearly 30 percent this year against the greenback, inflating the book value of Doosan Infracore's dollar-denominated debt in local currency terms.
"We will push very intensive restructuring measures for our Bobcat business as planned," Jeong said.
According to Doosan officials, the group is pursuing restructuring of more than 70 Bobcat construction vehicle factories around the world to improve labor productivity and cut fixed costs.
Its global restructuring is expected to help raise Bobcat's sales by $110 million to $150 million.
Doosan Holdings Europe and Doosan Infracore International had borrowed $2.9 billion to fund a $4.9 billion purchase last year of Ingersoll Rand's three business units ― Bobcat, Ingersoll Rand Utility Equipment and Ingersoll Rand Attachments.
The deal still is the biggest overseas acquisition by a Korean firm.
Holding Company System
Doosan Group is on the right track to transform to a holding company system ― another key catalyst for Doosan for greater investors' trust.
Doosan officials say dropping its packaging business has also been in line with efforts to transform to a holding company system.
"Investors are also concerned with the group's management structure. We are easing worries over management by departing from the group's control structure, based on a cross-shareholding scheme," Shin said.
Doosan announced a plan for a holding company system in January 2006.
For measures, the group separated its magazine and printing businesses, while it spun off bio-related business in December last year. In November 2006, Doosan dropped its "Kimchi" business.
The cross-shareholding system in South Korea has been accused of being the main means used by "chaebol" owners to exercise control over entire conglomerates despite their small interests.
Under the system, subsidiaries' trouble often has an adverse effect on other subsidiaries and makes them vulnerable to hostile takeovers.
It has also been cited as a major factor for the under-valuation of South Korean companies.
Doosan was fined by the nation's anti-trust watchdog in 2007 as the group's two subsidiaries ― Doosan Industrial Development and Doosan Heavy & Construction ― unfairly supported other units in the group, including the consulting arm Neoplux, by paying higher purchase prices.
The two subsidiaries were also found to have paid interest on loans taken out by other units on behalf of them.
Concentration
As well as restructuring for increased corporate transparency and to soothe investors' worries over the future of the group, Doosan plans to continue its leadership in the construction equipment sector with the biggest research center in Korea.
Last week, Doosan Infracore completed a 13 billion won machine tools research center to secure a bridgehead in the machine tools market when the economy recovers.
It also said it is targeting 2.2 trillion in annual machine tools sales by 2012. Doosan Infracore ― the world's No. 7 construction equipment maker by sales ― expects to achieve this year's machine tools sales target of 1.089 trillion won, up 18 percent from a year ago.
Samsung Card to Launch in Thailand
It is the first time for Samsung Card, a major credit card service provider in Korea, to expand overseas. The move is in line with the initiative from chairman Lee Kun-hee, who wants to make Samsung’s financial arm as global as its electronics business. Lee recently ended his short retirement from the group’s top position and retained his role as chairman of Samsung Electronics, the group’s flagship firm.
Samsung Card CEO, Choi Doh-seok held meetings with executives of the Thai firm, last week in Seoul, about launching the card business in Thailand, an insider said. “Choi and some other high-ranking executives were present. The atmosphere was very positive,” the source said.
The company’s public relations officials said Monday that it is an ongoing project and there is nothing to confirm, yet.
The source didn’t mention the name of the Thai company, but hinted it could be one of Samsung’s existing partners in the country.
Samsung is one of the most powerful global brands in mobile phones, TVs and shipbuilding. But its financial subsidiaries have focused on the domestic market with few branches outside of Korea.
Thailand is a natural choice to become the base camp of Samsung’s global expansion in the finance sector. The country is one of the largest economies in Southeast Asia, and Samsung has a strong brand name there, especially with its electronics and life insurance businesses.
Currently Samsung Life is operating a joint venture with Saha Pathana Inter-Holding, a major business group in Thailand. The Thai insurance business is believed to be a successful case of localization for the Samsung group.
The Thai joint venture will mark an important milestone in Samsung’s globalization efforts. Late last year, chairman Lee was reported to have reprimanded managers at the group’s financial subsidiaries, asking why they were unable to perform like their sister firms in the manufacturing sector on the global stage.
Samsung entered the credit card business in 1988 but it has no presence outside of Korea, except for a liaison office in New York. The firm’s CEO and vice chairman Choi alluded in his annual speech in January that from this year the firm would push for global expansion.
“When the market is saturated and the competition gets fierce, we need to develop new markets and new growth engines for the next five years or ten years to come,” he said.
Choi was formerly the CFO of Samsung Electronics. As one of the core executive members of the entire group, he was transferred to the credit card subsidiary early in 2009.
Samsung Card recorded 2.7 trillion won in revenues last year, down from 2.9 trillion won in 2008. But its net profit more than doubled to 603.8 billion from 257.7 billion
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