[넘버스]Hyundai Heavy Industries Group holds the legacy of Chairman Kim Woo-jung…’Daewoo DNA’ on the last train

Numbers(Numbers)As business and economy, Let’s interpret the technology. Numbers are a source of information. The information is open to anyone and the numbers are visible to anyone,, Not everyone has an eye to see the truth behind it. A story of numbers so that everyone can relate <Number>I will solve it easily with.

Doosan Infracore, formerly Doosan Group’s Cash Cow, is preparing to move to Hyundai Heavy Industries Group. On the 5th, Hyundai Heavy Industries Holdings entered into a stock purchase contract with Doosan Heavy Industries & Construction to transfer 34.97% of Doosan Infracore’s shares (75.5 million shares acquired). Doosan Heavy Industries & Construction is the largest shareholder of Doosan Infracore and owns a 35.41% stake.

Hyundai Heavy Industries Group and Doosan Group signed a main contract to acquire Doosan Infracore. This deal is expected to be concluded after a business combination review by domestic and international competition authorities such as the Fair Trade Commission.

Hyundai Heavy Industries Group will take over large companies in the shipbuilding and construction machinery sectors, including Daewoo Shipbuilding & Marine Engineering in 2019 and Doosan Infracore in 2021. Daewoo Shipbuilding & Marine Engineering is the second-largest shipbuilder in the world after Hyundai Heavy Industries. Doosan Infracore has the ninth largest market share in the global construction equipment market. Hyundai Heavy Industries Group has acquired two leading companies in the global market through M&A.

The two companies are characterized by being a’heritage’ of former Daewoo Group chairman Kim Woo-jung. Both Doosan Infracore and Daewoo Shipbuilding & Marine Engineering were established by spin-offs from Daewoo Heavy Industries & Construction. Daewoo Shipbuilding & Marine Engineering was the shipbuilding division of Daewoo Heavy Industries and Doosan Infracore was the machinery division.

Daewoo Heavy Industries was sold to pieces in 1999 when the Daewoo Group was disbanded in the aftermath of the financial crisis. The shipbuilding division was incorporated into Korea Development Bank and renamed Daewoo Shipbuilding & Marine Engineering. Doosan Infracore was acquired by Doosan Group in 2005 after being incorporated into Korea Asset Management Corporation. Daewoo International was incorporated into the POSCO Group in 2010 and changed its name to POSCO International. Daewoo Motors was incorporated into the US GM and Daewoo E&C was incorporated into the Kumho Group.

Former Chairman Kim Woo-jung’s legacy has been incorporated into a large group, and Daewoo Shipbuilding & Marine Engineering and Doosan Infracore’s’going to Hyundai Heavy Industries Group’ is expected to be the’last transfer’ of the remaining Daewoo Group affiliates. In particular, Daewoo Shipbuilding & Marine Engineering is meaningful as it has been in the management system of Korea Development Bank for over 20 years. Hyundai Heavy Industries Group has embraced Daewoo Group’s’DNA’ through this M&A.

Chairman Kim, who died in 2019, is a mythical manager who founded Daewoo Group at the age of 30 and raised the group to the second largest group in asset size after 30 years. At one time, Daewoo Group’s exports accounted for 10% of domestic exports. The’heavy and long’ industries that Daewoo Group has been selling to large groups have become the growth axis of the group.

With the acquisition of Daewoo Shipbuilding & Marine Engineering and Doosan Infracore, Hyundai Heavy Industries Group’s assets are expected to increase by 15 trillion won. It is a group of about KRW 60 trillion and grows in size.

Can Doosan Infracore and Daewoo Shipbuilding & Marine Engineering grow as before in Hyundai Heavy Industries Group? As the shipbuilding industry is still in a downturn, it may be premature to forecast Daewoo Shipbuilding & Marine Engineering. For Daewoo Shipbuilding & Marine Engineering, the order backlog is decreasing and the sales volume is also decreasing. It is difficult to predict net profit as the scale of non-operating expenses varies each year. The fact that shipbuilding is an order-taking industry makes it difficult to forecast Daewoo Shipbuilding & Marine Engineering’s earnings. Some of the major ship types of Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering are overlapping, and future restructuring is also expected.

Doosan Infracore is expected to continue growing. With Corona 19 last year, the domestic manufacturing industry was concentrated in a situation of’lightening the wind’. Doosan Infracore’s sales increased in this situation. Last year, Doosan Infracore recorded sales of KRW 3,229.8 billion and operating profit of KRW 2647 billion. This is the figure excluding Doosan Bobcat’s earnings (4,238 trillion won in sales).

Doosan Infracore’s heavy equipment division recorded sales of KRW 3,229.8 billion, and engine division sales of KRW 466.2 billion. Sales increased by 81.4 billion won (2.5%) from the previous year, and operating profit decreased by 18.5 billion won (6.6%).

Above all, growth is remarkable in the Chinese market, where global construction equipment companies compete. Last year, sales in the Chinese market were 1.46 trillion won, an increase of 2136 billion won from the previous year. The Chinese market is of great importance, accounting for 48% of Doosan Infracore’s total sales.

Last year, Doosan Infracore’s sales decreased in both the domestic and emerging markets, North America and Europe, but only in China. Sales in the Chinese market increased by 17% from the previous year, and sales in emerging markets (including domestic markets) and North American markets (including Europe) decreased by 6.4% and 7.8%, respectively.

Doosan Infracore expects to continue its growth this year. Doosan Infracore predicts that the Chinese market will grow 23% from the previous year. Sales in the Chinese market are peaking each year.

Doosan Infracore emphasized, “As it is the 100th anniversary of the founding of the Communist Party of China this year, further growth will be possible if an active economic stimulus plan comes out.” I did.

As of last year, Doosan Infracore’s Chinese market share was 6.4%. This is a drop of 0.9% from the previous year.

Hyundai Heavy Industries Group is expected to generate more than 2 trillion won in sales in the Chinese construction equipment market alone. Last year, Hyundai Construction Equipment’s sales in the Chinese market (8087 billion won) and Doosan Infracore (1.467 trillion won) totaled over 2 trillion won.

According to Hyundai Construction Equipment, the Chinese construction equipment market is expected to grow by 5% this year. A total of 290,000 construction equipment vehicles were sold last year, but this year’s sales are expected to exceed 300,000. Doosan Infracore has strengths in the Chinese market and Hyundai Construction Equipment in the North American market. If the two companies adjust the lineup of their flagship products and target competitive markets, Hyundai Heavy Industries Group’s construction equipment division is expected to strengthen its competitiveness.