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2011 2Q Investor Meeting 2011 2Q Investor Meeting

July 2011

Disclaimer
This presentation contains preliminary figures which may be materially different from the final figures. The financial information in this document are consolidated earnings results based on KIFRS. Previous earnings results have also been restated in compliance with K-IFRS. While the statements in this presentation represent our current assumptions, plans and expectations, and we believe these judgments are reasonable, they are not guarantees of future performance and involve known and unknown risks, uncertainties such as FX & raw material costs, and other factors that may cause actual results to differ materially from the results, performance, achievements or financial position expressed or implied in this presentation. This presentation is provided only as a reference material. Doosan Infracore assumes no responsibility for investment decisions. We trust your decisions will be based on your own independent judgment.

Table of Contents

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DI 2Q11 Results DI 2Q11 Highlights

2010 2 * 2Q11 Results *


Sales grew 9% YoY thanks to full-fledged global demand recovery for the construction equipment and machine tools divisions. EBIT also grew year-on-year on the back of strong profit improvement of the machine tools division and greater profit contribution from DII. Results
(Unit : KRW billion)

2Q10 Sales EBIT EBIT margin (%) (Net Financial Cost) Pretax Profit Profit from Discontinued Operations Net Profit 2,070.9 229.8 11.1% 82.5 -31.4 9.1 -33.0

3Q10 1,775.8 147.9 8.3% 76.2 121.1 6.2 107.6

4Q10 1,974.4 170.5 8.6% 74.9 60.9 11.9 57.6

1Q11 2,211.8 228.9 10.3% 72.5 190.2 6.7 148.6

2Q11 2,263.8 235.4 10.4% 71.4 126.1 79.5 170.8

YoY +9.3% +2.4% -0.7%P -13.5% TB +773.6% TB

* Figures are based on consolidated K-IFRS. K-IFRS financial reporting standard requires profits from the Industrial Vehicle BG to be classified as profits from discontinued operations.
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2Q11 divisional sales & EBIT *


Despite the weakness in China, the construction equipment division reported solid sales growth of 3% YoY thanks to 1) remarkable turnaround of developed markets (includes DII) and 2) increased contribution from emerging markets. EBIT of the machine tools division surged 440% YoY to reflect 1) favorable sales trends in the profitable developed markets and 2) price hikes. The engine division reported sales growth of 28% YoY and EBIT growth of 65% YoY due to growing demand from captive customers such as Daewoo Bus and Tata Commercial Vehicle.

Sales

(Unit : KRW billion)

EBIT & Margin

(Unit : KRW billion)

% of sales
Construction Equipment Machine Tools Engines

YoY +2.9%
Construction Equipment Machine Tools

EBIT margin 169.7 9.7%

YoY -19.4%

1,755.6

77.6%

359.5

15.9%

+44.4%

48.9

13.6%

+439.8%

148.7

6.6%

+27.7%

Engines

16.8 235.4

11.3%

+64.9%

Total

2,263.8

100.0%

+9.3%

Total

10.4%

+2.4%

* Figures are based on consolidated K-IFRS


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2010 2 * Enhanced financial soundness


With the business restructuring conducted in 2Q such as sale of the industrial vehicle division and 20% stake of DICC, net debt declined by KRW 626.1 billion and % of long-term debts increased to 83%.

Financials
2009 Current Assets Fixed Assets Total Assets Total Liabilities - Debts (% of long-term debt) Total Shareholders' Equity Liabilities/Equity Ratio 3,717.0 7,323.4 11,040.4 9,379.7 5,905.8 73.5% 1,660.7 564.8% 2010 3,855.7 7,155.9 11,011.6 9,254.1 5,548.5 80.2% 1,757.5 526.5% 1Q11 4,515.6 7,085.2 11,600.8 9,694.4 5,751.6 80.6% 1,906.4 508.5% 2Q11 4,798.9 6,923.6 11,722.5 9,348.6 5,125.5 82.8% 2,373.9 393.8%

(Unit : KRW billion)

QoQ +283.3 -161.6 +121.7 -345.8 -626.1 +2.2%P +467.5 -114.7%P

* Figures are based on consolidated K-IFRS. K-IFRS financial reporting standard does not require restatement of past balance sheets.
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Table of Contents

1 2

DI 2Q11 Results DI 2Q11 Highlights

2010 2 * Full-fledged recovery from developed markets

Construction Equipment

Sales contribution from developed markets continues to grow. With a more well-balanced regional portfolio within the construction equipment division, we expect to remain on the growth path and create synergies with DII.

% of regional sales for construction equipment BG


(Unit : KRW billion)

Heavy *

Compact * +26% +26% 493.5

1,705.6

1,755.6

China Asia & Emerging Market Developed Market

44%

31% 22% 22% 20%

U S

+51% +51% 35.3

391.6

23.4

20% 20% 47% 36%

2Q10

2Q11

E U R O P E

+41% +41% 112.7 79.8

+34% +34% 139.1 186.2

2Q10

2Q11

2Q10

2Q11

* Heavy / Europe includes Moxy Engineering, while US / Compact includes DIPP

2010 fundamental Stronger2 * competitiveness in China

Construction Equipment

Market share in China recovered from 7.8% in May to 8.7% in June thanks to recent marketing efforts such as offering special promotions and better financing terms. With launch of mid-sized excavator models in September, accelerated development of localized products, and enhanced sales and after-service network, we plan to further strengthen our fundamental competitiveness in China. Market share trend of DICC Stronger fundamental competitiveness
Active marketing Market Market - Promotions such as offering special prices and extended warranty period ing ing - Launch customer-specific financing products Stronger product competitiveness with the launch of the new 22-ton model - More price competitive and fuel efficient model to target customers seeking 'value for price' Products Products Accelerate product development of localized models - To launch mini excavators from Suzhou plan (October) - Stronger product development function in China - Enhance R&D capability by setting up R&D center Expanding sales and after-service network - Increase no. of dealers and improve the dealer management system - Increase no. of after service personnel and training hours
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13.4%

Wholesale M/S Retail M/S 11.4% 10.7% 10.8% 9.8% 11.3% 10.1% 8.7% 7.8%

2010

Jan

Feb

Mar Apr

May

Jun

Sales/ Sales/ Service Service

Growth engine from emerging markets

Construction Equipment

Sales surged 52% YoY thanks to remarkable growths in markets such as CIS, Latin America and India.

Emerging market sales in 2Q


(Unit : KRW billion)

Regional sales and YoY growth in 2Q


(Unit : KRW billion)

+52% +52% Middle East 151.5 Latin America 41.3 53.9 53.9

YoY

+58%

99.9

+31%

CIS

35.1

+158%

India 2Q11 2Q11

9.4

+56%

Full-fledged earnings improvement near past peak level

DII

DII reported sales close to its past peak level thanks to 1) dealer restocking and 2) demand growth from large rental companies. EBIT surged 2017% YoY, while net profit remained in the black for two consecutive quarters. DII result
(Unit : KRW billion) 765

Sales
(Unit : USD million) 764

2Q10

1Q11

2Q11

YoY

QoQ
548 554

638

Sales EBIT
EBIT margin Pretax Profit Net Profit

677.3

696.0

828.4

+22.3%

+19.0%
362

2.2

22.0

46.6 +2016.5% +112.2%

346

0.3%

3.2%

5.6%

+5.3%P +2.4%P

(68.0)

9.5

21.0

TB

+122.3%

(66.5)

32.0

16.5

TB

-48.6%

* Figures are based on consolidated K-IFRS

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Sizable order backlog to fuel future growth

DII

Thanks to growing order backlog as a result of the market turnaround, we anticipate sales and profitability to improve at an accelerated pace in 2H. We anticipate fleet orders from rental companies to continue on the back of rising utilization rates along with rental rate hikes. Order backlog trend
(Unit : 000 units)

North America rental utilization rate & price


(Unit : % YoY)

14.4

9.7 7.0

3.6 4.1 3.1 1Q 2Q 2010 3Q 4Q 1Q 2011


* Source : International Strategy & Investment Group
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2Q

Renaissance age for the machine tools

Machine Tools

Machine tools orders and sales are already significantly higher than the previous peak of 2008. Sales from North America and Europe are growing 2~3 times showing clear signs of demand recovery.

Quarterly sales and order trend

(Unit : units)

Regional sales breakdown


Regional Regional sales sales
+44% YoY +44% YoY

(Unit : KRW billion)

359.5
Domestic

249.0

NA Europe China Emerging markets

2Q10
% of sales % of sales Korea US Europe China Emerging

2Q11
2Q10 50% 13% 9% 22% 6% 2Q11 44% 18% 14% 16% 8%
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2010 2 * Developed market orders to lead to future profitability

Machine Tools

Order backlog rose 66% YoY on the back of 1) visible recovery in US and Europe and 2) stable demand from Korea. Profitability should also continue to improve thanks to remarkable demand recovery of profitable developed markets such as North America and Europe. % of order backlog and sales growth by region
YoY 11.6%

Quarterly EBIT and EBIT margin trend


13.6% 10.4%
KRW48.9bn

2,789

4,635

+66% +66%

6.5% 6.0% 0.9%

Domestic

43%

38%

+27% +27%

North America Europe China Emerging Markets

6% 11%

11% 21% 23% 8% 2Q11

+194 +194 +157 +157


+65% +65%

35% 5% 2Q11

+59 +59
1Q10 2Q11 3Q11 4Q11 1Q11 2Q11
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Thank You

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