Doosan posts massive losses amid liquidity crisis

The debt-laden Doosan Corporation posted a net loss in the first quarter as revenue inched down 1.2 percent, according to a preliminary earnings report filed by the company Thursday.

Doosan, the holding company of Doosan Group, on Thursday reported a 379.85 billion won ($309.1 million) net loss, a sharp turnaround from the 54.92 billion won net profit from the same quarter last year. It is the largest net loss since the company lost 524.9 billion won in the fourth quarter of 2018.

The company reported a 74.4 percent on-year decline in operating profit in the January-March period, falling to 90.88 billion won. Its revenue slid 1.2 percent on year to 4.43 trillion won.

The first quarter report includes all the performances of Doosan's affiliates, excluding its hydrogen battery unit Doosan Fuel Cell and Doosan Solus, which produces materials for displays, copper foils and battery foils.

Doosan Fuel Cell and Doosan Solus are the key Doosan affiliates that the industry insiders expect Doosan to sell off to overcome its ongoing liquidity crisis.

But selling off the affiliates wasn’t on in the agenda discussed during a Doosan Corporation board meeting Thursday, according to spokesperson Kim Ji-hyang.

Doosan received 2.4 trillion won in liquidity support from state-run banks last month, as Doosan Heavy Industries is running out of cash while 4.2 trillion won in debt is scheduled to mature this year.

Excluding the affiliates, Doosan reported 558.1 billion won in sales, a 7.4 percent increase in on-year sales to reach a 60.6 billion won operating profit. It operates businesses in electronic materials, industrial vehicles and Mottrol, which produces hydraulic components for heavy construction equipment.

Its sales slightly decreased on year due to a decline in sales of Mottrol, but operating profit increased due to earnings improvements of materials used to make semiconductors.

Doosan projected its second quarter sales will decline as the impact of the coronavirus continues to take a toll on sales of industrial vehicles. But it expects China’s expansion of investment in infrastructures to limit the decline.

On the same day, Doosan announced it will not allocate dividends in the first quarter, as the coronavirus created an unexpected crunch in the financial market, both inside and outside Korea. It said it will decide whether to allocate dividends in the second quarter depending on future financial market conditions.

BY JIN MIN-JI [jin.minji@joongang.co.kr]