Hyundai Doosan Infracore declares 1st cash dividend in 14 years

Hyundai Doosan Infracore Co., a South Korean construction equipment company, will pay dividends to its shareholders for the first time in 14 years.

At one time, the company spent 300 billion won ($230 million) annually in interest on loans alone. 

Last August, Hyundai Heavy Industries Holdings Co. (HHIH) completed its acquisition of Doosan Infracore Co., then-Korea’s No.1 construction equipment maker. The acquisition was widely viewed as having improved the company’s financial health. 

“The cash dividends will be payable within the business year of 2022,” a Hyundai Doosan Infracore employee told The Korea Economic Daily. “Over the mid- to long-term, we will pay dividends that are close to the average dividend payout ratio in the securities market.”

KB Securities estimates the average dividend payout ratio for this year's Kospi to be 19.6% and the market dividend rate to be 2.2%.

Judging by its net profit consensus, estimated at 156.7 billion won, shareholders will likely receive from 150 won to 160 won per share.

Doosan Infracore has not paid dividends to its shareholders since 2008, when it allocated 150 won per share. 

The company’s performance has seen steady improvement. 

According to FnGuide, this year’s operating profit consensus is expected to have increased 13.8% over last year to 301 billion won. 

In the second quarter of 2022, it posted 1.19 trillion won in revenue and 86.6 billion won in operating profit, below market expectations. The lackluster performance was attributed to the pandemic-driven supply bottleneck in China, its main market.

From 2005 to early 2021, Doosan Infracore was an affiliate of Doosan Corp. In 2007, the company initiated an acquisition of light equipment maker Doosan Bobat, borrowing heavily during the process.

Doosan Group holds the Bobcat Company, Doosan Enerbility, Doosan Bobcat, and other firms under its corporate umbrella.

By late 2015, total borrowing had soared to 6.22 trillion won. Loan interest alone cost the company 300 billion won in 2013. 

Its financial structure improved drastically since being bought by Hyundai last year, thanks to an equity spinoff and capital increase through the issuance of new stocks. 

At the end of June, it recorded a 219% debt ratio, a 30.12% point drop from late last year. 

“We plan to secure available profit for dividends and return it to shareholders,” a Hyundai Doosan employee said. 

Write to Ik-Hwan Kim at lovepen@hankyung.com
Jee Abbey Lee edited this article.