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| Hanul Nuclear Power Plant in Uljin, North Gyeongsang Province / Courtesy of Doosan Heavy Industries & Construction |
President resigns in 9 months over faltering bottom line
By Nam Hyun-woo
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| Doosan Heavy Industries & Construction President Kim Myung-woo |
While it is suffering from aggravating market conditions, its president offered to resign just nine months after he took the post, expanding uncertainties surrounding the power plant facility firm.
According to officials, Wednesday, Doosan Heavy President Kim Myung-woo sent an email to 7,200 employees of the company on Monday and announced he will step down from the post to take responsibility for the company's disappointing earnings.
"Though Doosan Heavy is suffering difficulties now, I'm sure that the company can rebound," Kim said in the letter. "Looking at the past, the company has experienced worse problems and crises before but has successfully overcome those difficulties."
Kim joined the company's executive team as the No. 2 leader in March with a duty of normalizing its operation. Along with Chairman Park Gee-won and Chief Financial Officer Choi Hyoung-hee, Kim led a massive personnel restructuring of the company, but failed to see a recovery.
Doosan Heavy logged 6 billion won ($5.32 million) in operating profit in the third quarter, down 85.6 percent from a year earlier. Along with the faltering profitability, it logged a net loss in the quarter, while its debt ratio surpassed 165 percent and total liability surged to 5.2 trillion won as of June.
At the end of last year, the company sacked 25 percent of its executives to cut costs, and is currently planning for two months paid leave among employees over a certain pay grade in the first half of next year. Also, it is receiving applications from employees to move to other Doosan Group companies.
Along with the belt-tightening, Doosan Heavy is selling its assets too. In March, it sold its 42.7 percent stake in Doosan Engine, now HSD Engine, to a private equity firm for 82.2 billion won, and sold its 10.6 percent stake in Doosan Bobcat for 368.1 billion won five months later.
The downturn came amid a cut in the orders from the Middle East due to the low oil price. Orders for nuclear and other power plant facilities from emerging markets also plunged as the global economy slows. Not only Doosan Heavy but also other global power facility giants such as General Electric have also announced job cuts.
Dealing a heavier blow is the government's policy of phasing out nuclear energy as a power source.
Doosan Heavy planned to provide a nuclear turbine, generator and other facilities for Shin Hanul 3 and 4 reactors in Uljin County, North Gyeongsang Province, but the government halted the construction of the reactors last year as part of its post-nuclear policy. Doosan Heavy has already spent 493 billion won on those facilities.
As its nuclear power business loses luster in its home country, its total orders have sharply declined. Doosan Heavy posted more than 9 trillion won in orders in 2016, but it shrank to 5 trillion won in 2017 and 3.7 trillion won in the first nine months of this year.
"Given the firm's order goal for this year was 6.9 trillion won, it seems very difficult for the company to reach their goal," KB Securities analyst Jeong Dong-ik said. "Also, along with declining order backlog, rises in raw material costs are also a burden for the company's profitability."
