To Our Customers and Dealers
We have now entered a promising and hope-filled New Year, 2006. Last year, 2005, the global economy was hit by terrorist attacks, natural disasters, high oil prices, raw material shortages, unstable exchange rates and rising interest rates. Despite such adversity, solid economic growth was realized. China continued to boast rapid growth and is emerging as a global powerhouse, while the Japanese economy also started to regain its former vitality. Although the world economy continued to grow at a respectable pace, demand in Korea remained sluggish, and the economy was unable to make a complete turnaround.
Last year our company was re-launched as Doosan Infracore. Slow domestic demand notwithstanding, our people rallied around our new vision of becoming one of the world's top five players in the infrastructure support business (ISB) by 2015. Our collective effort in 2005 resulted in sales of W2.81 trillion with an operating income of W180 billion, significantly surpassing both of our original performance targets. The result, we overcame the concerns and fears that typically accompany a major change in a corporate structure.
We can expect some growing uncertainty in our business surroundings and economic environment in the coming year. The world economy is forecast to register about the same growth rate as it did in 2005. With a recovery in domestic demand, the Korean economy is predicted to grow nearly 5%. However, Korean investments in new facilities and construction, which affect our business intimately, will not completely free us from the ongoing downturn. The Chinese government is also forecasted to maintain its macroeconomic market controls.
Survival of the Fittest is the rule in today's global economy, which is also undergoing a sweeping change. The wave of borderless economic struggle will rise even more. Korea's local elections this coming May could trigger political strife as well. Perhaps, we at Doosan Infracore will also be facing tougher times.
At this point, all employees must prepare themselves with a sense of impending crisis. We must all be ready and willing to exert ourselves more in the coming year than we ever have before.
Our customers and dealers know that we have set some very ambitious targets for ourselves since our becoming Doosan Infracore. We aim to be among the world's very best, and we have brought together all our knowledge and capabilities to make this happen.
We began company-wide innovation programs last year to get us started in the direction of our vision. We organized and hosted large international, in-house, exhibitions (DIMF and DiCEF) and demonstrated our growth potential to the world.
Along with our ambitious vision, we have established several challenging new growth targets. In 2006, we aim to achieve sales of W 3.23 trillion, up 15% year on year, and operating income of W250 billion, a 39% increase over the previous year. As we did last year, we will focus our innovative activities in three areas: strategies & growth, operations improvement, and organizational competency strengthening.
Let me now explain our results and key tasks for the coming year:
The first task involves strategies and growth. The 5-year (mid-term) strategic direction for the overall company, as well as strategic direction and tasks for each Business Group (BG), have already been decided. This year, we will strengthen our abilities to execute so that we may elicit tangible results form the tasks already chosen. We also plan to seek globally for more opportunities for mergers and acquisitions that can help us to emerge as a truly global company.
Second is operational innovation. We have completed our diagnosis of company-wide production, procurement and design, and are now moving forward with implementing these innovation tasks. Improvements in procurement have saved over W16 billion. We have implemented changes to improve the operability of our construction equipment and to get better performance from our new forklift designs. In the coming year, the Design Results Improvement Program will be expanded to excavators, machine tools and engines. Each BG will work hard at production innovation and implementing improvement activities on the factory floor.
Finally, there is the task of reinforcing organizational competencies. The People Program has been put into practice to enhance strategy execution skills. We have also completed organizational restructuring and worker redeployment. In 2006, we will expand our overseas hiring and greatly increase our investment in improving individual employee leadership skills by including the full-scale implementation of the Performance and Leadership Program.
All Doosan Infracore employees will remain dedicated to meeting your expectations in 2006, and we will work hard to repay your trust in us. Our company is at an important juncture as we start out anew toward the ranks of the world's very best in the business. We have the passion and the resolve to reach our goal and have reaffirmed our commitment to be the market leader. We are bringing together our experience as well as devotion and enthusiasm to make Doosan Infracore a most rewarding and fulfilling place to work.
Our people pledge unanimously to build a strong company that can prevail in global competition. We will continue to move forward to become a top-tier global enterprise that has the public's respect and loyalty.
In closing, I'd like to thank you all for your support in 2005 and ask for your continued support in 2006.