Doosan Enerbility: "Operating Cash Flow Negative KRW 947.5 Billion in H1," Czech Nuclear Project Becomes a Source of Concern

[Korea Financial Times, Shin Haeju] With Doosan Enerbility (CEO and Chairman Park Ji-won) grappling with a tightening financial situation, anxiety is escalating as its highly anticipated Czech nuclear power plant deal, envisioned as a breakthrough for the latter half of the year, has recently become entangled in a royalty controversy.

Doosan Enerbility achieved solid performance in the first half of this year. It secured orders totaling KRW 3.7573 trillion, a 98.4% increase from a year ago. On a separate financial statement basis, it recorded revenues of KRW 3.5180 trillion and operating profit of KRW 191.7 billion. These figures represent increases of 17.8% and 6.4% year-on-year, respectively.

However, its operating cash flow significantly worsened to negative KRW 947.5 billion, more than quadrupling the negative figure compared to the previous year. This deterioration is attributed to an increase in uncollected receivables and a larger proportion of unsold inventory. Accounts receivable rose by 50.7% year-on-year to KRW 765.5 billion, and inventories increased by 25.5% to KRW 457.2 billion.
Consequently, while the company reduced investments and expanded borrowings, these efforts were insufficient to boost cash reserves. As of the end of June, Doosan Enerbility's cash on hand was KRW 127.1 billion, a 70% decrease compared to the same period last year.

Cash flow from investing activities shrank by more than six times year-on-year to negative KRW 36.1 billion, while cash flow from financing activities surged by 238.8% to KRW 472.0 billion. Net borrowings increased by 41.7% year-on-year to KRW 3.5796 trillion, and the debt-to-equity ratio rose by 3.8 percentage points to 135.5% compared to the previous year.


Amidst this situation, uncertainties regarding the profitability of the two-unit Dukovany nuclear power plant project in the Czech Republic, identified as Doosan Enerbility's largest source of revenue in the second half, are also being raised.

Recently, the terms of an agreement signed between Korea Hydro & Nuclear Power (KHNP) and U.S. nuclear firm Westinghouse have been disclosed. This agreement was made as KHNP secured the KRW 26 trillion Czech new nuclear power plant construction project in June.

According to the agreement, KHNP will purchase Westinghouse equipment worth KRW 900 billion and pay KRW 240 billion in royalties for every nuclear reactor exported over the next 50 years.

The agreement is also reported to include clauses requiring technical verification for exporting South Korea's independently developed Small Modular Reactors (SMRs) and prohibiting KHNP from securing new nuclear power plant orders in Europe (excluding the Czech Republic), North America, Japan, the UK, and Ukraine.

Doosan Enerbility is currently in contract negotiations with KHNP regarding the supply of equipment and construction for the Czech nuclear power plant. The company anticipates securing contracts worth KRW 3.8 trillion in the second half of the year through these negotiations. This amount is equivalent to the total value of all projects Doosan Enerbility secured in the first half.

Meanwhile, as these facts became known, Doosan Enerbility's stock price plummeted by 8.6% on the 19th. On the 20th, its stock price briefly fell to KRW 51,100 in early trading, hitting its lowest point in the last three months.


Shin Haeju (hjs0509@fntimes.com)