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Doosan Heavy pins hopes on U.K. deal

Company seeks to exit from slump with multiple nuclear power deals in Q1

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Published : 2014-01-26 19:45
Updated : 2014-01-26 19:45

An employee walks past a sign at Doosan Heavy Industries & Construction’s plant in Changwon, South Gyeongsang Province. (Bloomberg)

Doosan Heavy Industries & Construction is poised to sign a 3 trillion ($2.8 billion) nuclear power deal in the U.K. next month involving the maintenance of outdated nuclear plants.

The move is now prompting market watchers to issue an optimistic outlook for Korea’s power heavyweight.

“When the deal is sealed, Doosan Heavy, which has failed to meet its annual order target for two years in a row in 2012 and 2013, will be able to make a turning point in recovery this year,” Choi Won-kyung, a stock analyst from Kiwoom Securities, said.

The company has declined to comment but hinted that the project has indeed been given the green light in the U.K.

To be more exact, the contract will be signed between Doosan Power Systems ― a subsidiary of Doosan Heavy ― and EDF, a French-controlled utility firm operating in the U.K.

Under the deal, Doosan Heavy, with its know-how in power plant construction and power generation equipment, will offer maintenance and upgrade services for 10 years to 15 longer than nuclear power plants in the U.K. that EDF owns and operates.

“The talks between the two sides are in the final stages,” the sources said.

Meanwhile, Doosan Heavy is also a few steps away from clinching another power deal in Europe.

The company has joined a bid for a Finnish nuclear power plant project as a member of a Korean-consortium, led by state-run Korea Hydro & Nuclear Power Corp.

The preferred bidder for the construction of the Olkiluoto nuclear power plant unit 4 in Finland is expected to be decided at the end of January this year, KHNP’s chief executive Cho Seok said in a press meeting at the end of last year.

Although concerns over the negative impact of the nation’s nuclear parts scandal on the bid were prevalent, Cho assured that there is still a chance of winning the deal.

If the Korean consortium is successful, Doosan Heavy will offer power generation equipment for the Finnish project.

Further, Doosan may look forward to joining in projects for building new nuclear power plants during the first quarter of this year once the government finalizes a second national basic energy plan in February, according to Cho.

Once Doosan clinches more deals, the company can expect to see its new orders climb to worth around 7 trillion won this year.

Doosan shareholders have been aspiring for new orders to lift the company’s sagging share prices.

Doosan Heavy stocks stood at 36,050 won last Friday to reflect a 65 percent drop from its peak at 97,000 won in January 2010.

By Seo Jee-yeon (jyseo@heraldcorp.com)

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