Doosan Group’s Strategic Business Restructuring: Incorporating Doosan Bobcat as a Subsidiary of Doosan Robotics

Doosan Group has announced a significant business restructuring to position its robotics business as a core growth driver

Doosan Group has announced a significant business restructuring to position its robotics business as a core growth driver. The central aspect of this restructuring involves incorporating Doosan Bobcat as a 100% subsidiary of Doosan Robotics. This move aims to leverage Doosan Bobcat's financial strength to enhance Doosan Robotics' technological development and market expansion. However, some shareholders have expressed concerns. This blog post will explore the background of Doosan Group’s restructuring, the anticipated synergies, and the associated concerns and outlook.

Incorporating Doosan Bobcat as a Subsidiary of Doosan Robotics

Recently, Doosan Group revealed plans to transfer its subsidiary, Doosan Bobcat, from Doosan Enerbility to Doosan Robotics. Doosan Enerbility holds a 46.06% stake in Doosan Bobcat. To facilitate this transfer, Doosan Enerbility will be split into an operating company and a newly established investment company, with the investment company’s shares being transferred to Doosan Robotics.

Doosan Bobcat has been a significant cash cow for Doosan Group, generating over 1 trillion KRW in annual operating profit. Last year alone, it recorded an operating profit of 1.3899 trillion KRW, accounting for 97% of Doosan Group’s total operating profit. In contrast, Doosan Robotics, founded in 2015, has been consistently operating at a loss, with a deficit of 13.2 billion KRW in 2022 and 19.2 billion KRW last year. The restructuring strategy is to use Doosan Bobcat’s financial resources to bolster the growth of the robotics business.

Expected Synergies

Despite the different business areas of Doosan Bobcat and Doosan Enerbility, this restructuring is expected to generate various synergies. Doosan Bobcat can leverage Doosan Robotics’ technology to enhance the performance of its construction machinery. Additionally, collaborative efforts can be made to integrate Doosan Robotics’ collaborative robots into Doosan Bobcat’s factory automation.

Doosan Group officials mentioned, “The joint R&D efforts between the two companies, focusing on motion control technology using AI, vision recognition technology, and high-performance autonomous driving technology, will reduce redundant investments and create synergies.” Doosan Robotics can also utilize Doosan Bobcat’s extensive dealer network in the US and Europe to distribute its products. The dividends from Doosan Bobcat will provide Doosan Robotics with substantial investment capital, potentially accelerating global M&A activities in the robotics sector.

Concerns and Outlook

However, there are concerns among some shareholders regarding this restructuring. Particularly, shareholders of Doosan Enerbility, who are seeing the departure of Doosan Bobcat, have expressed dissatisfaction. There is also criticism that the restructuring primarily benefits the Doosan Group’s controlling family, given the financial struggles of Doosan Robotics. Despite these concerns, the restructuring is expected to improve Doosan Group’s financial structure, with a projected reduction of approximately 1.2 trillion KRW in debt. Doosan Group aims to create clusters of synergistic businesses through this restructuring.

Doosan Group’s restructuring is a strategic move to position the robotics business as a future growth engine. By combining Doosan Bobcat’s financial strength with Doosan Robotics’ technological capabilities, the group aims to generate synergies and enhance its competitive edge in the global market. While there are concerns and criticisms from some shareholders, the success of this bold restructuring will be crucial for Doosan Group’s future. The industry will be closely watching Doosan Group’s next steps with great interest and anticipation.