Doosan Bobcat, Doosan Group’s cash cow, set for record 2022 earnings

Doosan Bobcat, the construction and agricultural machine making affiliate of South Korea’s Doosan Group, is poised to join the “one trillion won operating profit club” this year, on the back of strong sales in the US and the dollar’s strength against the Korean won.

The equipment maker’s strong performance would also help boost the parent conglomerate’s earnings to the highest level in three years, analysts said.

According to financial market data provider FnGuide on Thursday, Doosan Bobcat is forecast to post a record 1.13 trillion won ($792 million) in annual operating profit this year, up 70% from the 595.3 billion won it earned in 2021.

Analysts have been raising their projections for Doosan Bobcat's earnings.

FnGuide data showed analysts’ consensus for the company’s 2022 operating profit was 717.8 billion won in June, and their figures rose further in September to 871 billion won.

In the third quarter, Doosan Bobcat reported an earnings surprise with an operating profit of 316.9 billion won, up 144% from the same period a year earlier.

For the first nine months of the year, its operating profit gained 86% on year to 820.8 billion won.

HIGHER US SALES OF TRACTORS, STRONGER DOLLAR

Doosan Bobcat, which manufactures construction equipment such as compact excavators, tractors, forklifts and skid-steer loaders, generates more than two-thirds of its sales in North American countries, including the US, with most transactions settled in dollars.

A softening won versus the dollar usually supports Korean exporters by making their products cheaper in overseas markets. It also boosts the converted value of their overseas sales, contributing to their earnings.

The price of the Bobcat S590 Skid-Steer Loader, one of the company’s main products, hovered around 51 million won in the first half of this year, up nearly 11% from last year’s average of 46 million won.

Helped by Doosan Bobcat’s expected earnings improvement, the group’s profit is also set to rise this year.

Doosan Corp., the holding company of Doosan Group, posted 895.1 billion won in the first nine months of the year, up 16.7% from a year earlier.

The market consensus for the full-year operating profit is 1.09 trillion won, which if realized would be the highest figure since 1.23 trillion won in 2019.

Doosan Bobcat has been the group's cash cow, logging handsome profit growth among affiliates in recent quarters.

Doosan Group acquired Bobcat from US-based industrial equipment company Ingersoll Rand in 2007 for $4.9 billion. It was the largest overseas acquisition at the time – one that pushed Doosan Group into debt.

As the conglomerate struggled following the Asian and global financial crises, it once considered selling Bobcat as part of its groupwide restructuring.

Write to Ik-Hwan Kim at lovepen@hankyung.com
In-Soo Nam edited this article.