South Korea’s Doosan Corporation has reported strong first-quarter earnings with a robust guidance for fiscal 2017, raising hope that the holding company of Doosan Group, a machinery and construction equipment conglomerate, will be able to further deleverage the balance sheet and get back on a growth track.

The company reported January-March operating profit of 265.8 billion won ($236 million) on a consolidated basis, up 5.6 percent from a year ago over sales of 4.86 trillion won, up 10.2 percent. On a non-consolidated basis, operating profit surged 43.7 percent to 49 billion won.

Doosan Corporation runs its own business of PCB production, industrial vehicles, oil hydraulic equipment and fuel cells.

Shares of Doosan Corporation on Wednesday closed up 1.79 percent at 114,000 won.

Operating profit from its electronics business mainly for PCB production climbed 56 percent on year to 28.4 billion won, while industrial vehicle business reported a 42.4 percent jump to 15.5 billion won. Mottrol business for oil hydraulic equipment reported 5.2 billion won in operating profit, up a stunning 116.7 percent from the same period last year.

‘’These three business sectors have a bright outlook for the second quarter because the electronics division is venturing into a mobile market in Greater China, with a possible increase in government demand for industry vehicles,” said Jung Dae-ro, a researcher at Mirae Asset Daewoo Securities.

Subsidiaries also show improvement in business performance. As of the end of March, Doosan Corporation holds a 36.8 percent in Doosan Heavy Industries & Construction, which controls Doosan Infracore, Engineering & Construction and Doosan Engine.

Doosan Infracore announced a surprise earnings increase in the first quarter, posting 148.4 billion won, up 33.5 percent from a year ago. Doosan Engine’s operating profit soared 307.4 percent to 7 billion won.

The conglomerate cut down debt by some 2 trillion won last year through sales of equity holdings including a 304.6 billion won stake in Korea Aerospace Industries. Additional cash flow is also expected from using its stake in Doosan Bobcat that went public in Korea last year.

By Yoon Jin-ho

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