Weak won, boon to Doosan Bobcat but bane to Enerbility

A weaker South Korean won currency has become a double-edged sword to Doosan Group’s affiliates. Construction equipment maker Doosan Bobcat is enjoying increasing profit due to its heavy reliance on sales in the US, while power plant builder Doosan Enerbility Co. suffers mounting losses from foreign exchange rates and derivatives.

Doosan Bobcat is expected to report an operating profit of 871 billion won ($620 million) on average this year with some analysts predicting more than 1 trillion won, according to financial data provider FnGuide Inc. on Thursday. The consensus profit forecast was 13.2% higher than the previous estimate of 769 billion won.

The maker of construction equipment such as compact excavators and compact loaders generates about 71% of its sales in North American countries including the US with most transactions settled in dollars. The US currency has risen 18% against the won so far this year.

That helped the company increase operating profit by 61.8% to 503.9 billion won in the first half from a year earlier with sales up 53.9% to 3.9 trillion won. The second-half outlook is even brighter as the dollar has extended its gains versus the South Korean currency.

On the other hand, Doosan Enerbility was hit hard by the dollar’s strength. Its foreign currency translation loss and derivatives loss soared 452.5% and 194.6%, respectively, to 164.1 billion won and 254.1 billion won in the January-June period on a separate basis.

That forced the company to log a net loss of 113.5 billion won during the period, turning to the red.

Write to Ik-Hwan Kim at lovepen@hankyung.com
Jongwoo Cheon edited this article.