[Asia Economy Reporter Ki-min Lee] The U.S. housing market, which had been stagnant due to the novel coronavirus infection (COVID-19), is recovering at a rapid pace. Accordingly, the performance of Doosan Bobcat, the leading company in the North American compact construction equipment market, is also expected to improve.
According to industry sources on the 5th, the U.S. housing market, which had been sluggish since April due to the spread of COVID-19, has rebounded quickly and recently entered a boom period.
The National Association of Home Builders (NAHB) housing market index, an indicator of U.S. home sales and new home construction, plummeted until April 30th, when the first wave of COVID-19 hit North America. However, it soared to 85 in October and 90 last month. This is the highest level in the 35 years since NAHB began compiling the housing index. A housing index above 50 indicates a boom in the North American housing market. Shinhan Financial Investment reported last month that housing starts in the U.S. in October reached 132,000 units, a 15% increase compared to the same period last year. In particular, single-family housing starts were 101,000 units, up 31.5% from the same period last year.
The market believes that the spread of COVID-19 in urban areas of the U.S. has increased buyers moving to suburban areas, and low mortgage rates have accelerated new home transactions. NAHB Chairman Chuck Fow also stated, "Historically low mortgage rates, favorable demographics, and the continued suburban preference of homebuyers have stimulated demand," adding, "New home sales have increased by nearly 17% this year." As the U.S. housing market boom is expected to continue next year, single-family housing starts are projected to grow by 18% compared to this year.
Accordingly, Doosan Bobcat, whose U.S. sales account for 70% of total sales, is expected to see a significant improvement in its fourth-quarter performance. Doosan Bobcat recorded sales and operating profit of $912 million and $93 million, respectively, in the third quarter of this year, similar to the same period last year, showing signs of recovery. Doosan Bobcat showed strong sales of new product lines related to compact tractors, mini track loaders, and zero-turn mowers for agricultural and landscaping small equipment in the North American region.
Some securities investment firms expect Doosan Bobcat's fourth-quarter sales and operating profit to increase by 5-10% compared to the third quarter, as sales of agricultural and landscaping equipment in suburban areas stand out due to the North American housing market boom.
Furthermore, Shinhan Financial Investment explained in a report regarding Doosan Bobcat's North American performance next year, "North American sales next year are expected to grow 13.4% to $3.04 billion compared to this year," adding, "Considering demand for inventory accumulation, Doosan Bobcat's North American sales next year could grow up to 32% compared to this year." According to industry sources, dealer inventory in the North American market fell to 2.3 months in September, below the average inventory level of 4-5 months.
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