Doosan Bobcat unveils massive corporate value-up plans

Doosan Bobcat Inc., a global construction machinery maker owned by South Korea’s Doosan Group, has unveiled massive corporate value-up measures, including a higher shareholder return ratio, a more frequent dividend payout and a share buyback and cancellation.

The move is part of a value-enhancement plan introduced to appease shareholders after its attempt to merge with Doosan Robotics Inc. failed following its spin-off from Doosan Enerbility Co.

Doosan Bobcat on Monday announced plans to raise its total shareholder return (TSR) ratio and dividends to industry-leading levels and buy back treasury shares worth 200 billion won ($139 million) for cancellation.

The company has set a TSR ratio target of 40% for this year, exceeding the domestic industry and manufacturing sector average. Last year, Doosan Bobcat’s shareholder return ratio stood at 17%.

TSR is a measure of financial performance, indicating the total amount an investor reaps from an investment – specifically, equities or shares of stock.

It is calculated by combining the amount spent on dividends and share buybacks and cancellations, divided by net income. TSR is a critical metric for stock investors.

BOLSTERED SHAREHOLDER RETURN POLICY

Starting this year, the company plans to pay a minimum dividend of 1,600 won per share. In 2022 and last year, the company paid 1,350 won and 1,600 won in dividends, respectively.

“Last year’s dividend was the highest since the company went public. We aim to maintain or exceed this level consistently,” said a company official.

The company said it will increase the frequency of its dividend payout from twice a year to a quarterly dividend payment system.

Starting in the first quarter of 2025, the company will pay 400 won per share at the end of each quarter through the third quarter. The year-end dividend for the fourth quarter will be a minimum of 400 won per share, it said.

Depending on the shareholder return ratio and market conditions, it said additional dividends or share buybacks are possible.

As part of a special shareholder return initiative, Doosan Bobcat will implement a share buyback and cancellation worth 200 billion won this month.

To back up its bolstered shareholder return policy, Bobcat said it aims to increase its sales revenue by an average of 12% annually through 2030.

If successful, its sales would rise to 16 trillion won in 2030 from an estimated 8.24 trillion won this year, it said.

“We aim to enhance corporate value through higher shareholder returns and business growth. We also plan to achieve revenue growth through M&As and technological innovation,” said a company executive.

ALIGN PARTNERS’ REQUEST

In October, Align Partners Capital Management Inc., a Korean activist fund, called on Doosan Bobcat to implement measures to boost its shareholder value, saying that Doosan Bobcat’s corporate value is significantly lower than its fundamentals.

A minority shareholder of Doosan Bobcat with a 1% stake in the machinery maker, Align Partners sent a letter to Doosan Bobcat’s management requesting to increase shareholder returns, including higher dividends, and sell non-core assets.

In July, Doosan Corp. the conglomerate’s holding company, pushed for corporate restructuring that involved Doosan Enerbility, a power plant engineering affiliate, handing over its entire 46.06% stake in Doosan Bobcat, a group cash cow, to loss-making Doosan Robotics.

The group, however, scrapped the plan in August amid opposition from investors and Korea’s financial watchdog agency, the Financial Supervisory Service.

The conglomerate pushed the merger again but failed to bear fruit after President Yoo Suk Yeol’s failed martial law attempt pummeled the country’s financial markets.

Doosan Bobcat manufactures construction equipment such as compact excavators, tractors, forklifts and skid-steer loaders and sells them under the Bobcat brand around the globe.

Doosan Group acquired Bobcat from US-based industrial equipment company Ingersoll Rand for $4.9 billion in 2007 — the conglomerate’s largest overseas acquisition at the time.

In early Tuesday trade in Seoul, shares of Doosan Bobcat were up 0.7% at 41,850 won, outperforming the broader Kospi index’s 0.7% fall.

The stock closed 3.2% lower on Monday.

Write to Woo-Sub Kim at duter@hankyung.com
In-Soo Nam edited this article.