Sales Top W2.11T after 3 Qtrs.

Domestic sales up 9.2%, exports 14% higher YOY

2006. 1. 9

- Domestic sales up 9.2%, exports 14% higher YOY
- 2006 sales target set at W3.3 trillion

Doosan Infracore achieved just over W2.11 trillion in sales revenue through the first nine months of 2005, while operating income reached W134.2 billion and ordinary income amounted to W159.2 billion.
Despite a slowdown in domestic demand, the company sold W890.3 billion worth of products in the Korean market, up 9.2% year on year (not including W202.5 billion in appropriations for the change in subcontract related accounting policy). Exports, meanwhile, were just over W1.22 trillion, an increase of 14% from the same period in 2004. Overall sales of major product categories (construction equipment, forklift trucks and machine tools) were 50% higher in the Americas and Europe, and machine tool sales doubled in the Americas.
The company repaid W73.6 billion in borrowings, lowering the ratio of debt to equity from 152% at the end of 2004 to 133% at the end of September 2005. The net debt-to-equity also dropped from 53% to 45%.
Doosan Infracore has set ambitious annual sales targets of W3.3 trillion for 2006 (about 16% higher than this year's projection) and W4 trillion for 2007 (21% more than the 2005 estimated total). The company also plans to see operating income rise 47% (W252 billion) year on year in 2006 and another 27% (W320 billion) in 2007.
The rosy outlook on based on expectations for sharply rising exports of construction equipment to the Americas and Middle East. At the same time, the Chinese construction market is forecasted to make a steady rebound next year, and the company will put a new line of construction equipment models on the market in 2006.
The machine tool sector has been an important growth driver, and the company expects that trend to continue. In particular, Doosan Infracore is looking to increase its share of the rapidly growing Chinese, Indian and Russian machine tool markets.
The Industrial Vehicle Division should increase its exports and global market share with the launch of next-generation forklift models. Sales of engines for generators are expected to rise as well as demand continues to grow in China.
Various other factors are expected to contribute to higher profitability. The company's operational innovation activities are starting to show tangible results. Prices for raw and secondary materials have stabilized, which should help to lower costs. The company has stepped up its hedging against exchange rates, which is reducing the fluctuations in operating income, and one-time costs related to post-merger integration are falling