It is a great pleasure to welcome you to the 44th regular shareholders’ meeting of Doosan Heavy Industries. I would like to thank you for taking the time from your busy schedules to attend today’s meeting. I would also like to extend my appreciation to you for wholeheartedly supporting us over the past year as we made further strides toward becoming a global company.

Looking back, 2006 was a meaningful year for Doosan Heavy Industries.

The strategic tasks we have pursued since privatization started to show visible results. We accomplished our long-standing task of securing original boiler technology through the acquisition of the renowned UK-based engineering firm Doosan Babcock. We acquired IMGB of Romania, launched our initiative to build a plant in Vietnam, and established India E&S.

Additionally, I am delighted to say that Doosan Heavy Industries is emerging as a major player in the worldwide EPC market. Last year, we received orders for two major projects in the Middle East, a core market. We have been selected to carry out the BARKA Phase 2 project in Oman and the Al Taweelah A10 project in the UAE.

These accomplishments would not have been possible without the encouragement and guidance from our shareholders.

While we made significant strides, operating results last year fell short of our initial expectations, mostly because an agreement for a large-scale project was postponed to 2007. In fiscal 2006, we achieved W3,024.8bn in new orders, W3,587bn in sales, and W208.4bn in operating profit.

However, last year’s shortfall only represents a temporary setback. Our growth potential and future prospects remain strong, as indicated by the sustained rise in our share price.

The year 2007 presents both threats and opportunities for Doosan Heavy Industries.

There are signs that nuclear power generation will expand in countries such as China and the US. We also expect more opportunities to emerge in the key markets of the Middle East, India and Southeast Asia; these regions should continue to place more orders for large-scale EPC projects. On the other hand, new entrants from China are posing a threat in the overseas power plant market. In desalination plants, MED/RO plants are increasing in size and enjoying a faster-than-expected boost in demand. We face the risk of falling back if we do not respond appropriately to these trends.

Doosan Heavy Industries will navigate the changing environment with prudent planning and execution. We are aiming to produce record results in fiscal 2007. Our targets are W5,766bn in new orders, W3,957bn in sales and W340bn in operating profit. To reach these goals, we will focus on the following four strategies.

First of all, we will capitalize on our achievements to date to advance our business portfolio.

Building on last year’s orders from the Middle East, we will further expand our EPC business. We expect more large-scale EPC projects to be pursued in the Middle East, as well as in China, India and Southeast Asia. Landing the orders for these projects will reinforce our position as a major player in the EPC market.

We also plan to branch out to the power plant markets in the US and Europe in conjunction with Doosan Babcock. Demand for coal-based power generation is expected to increase in those regions owing to the persistent strength in oil price. Entry into the US and European markets will take Doosan Heavy Industries one step closer to becoming a truly global company. ?

Moreover, we will pursue cooperation with Westinghouse to supply the main equipments for nuclear power generation in China and the US. Turning to desalination plants, we will place greater emphasis on small/mid-size RO plants and water treatment facilities and pursue entry into the after-sales service market.

Second, we will step up development of core technologies and continue to invest in new technologies.

We are seeing visible progress in the development of the USC (Ultra Super Critical) generation system, a task we have pursued in step with the rising trend in power generation capacity worldwide. Our focus is now on commercialization, and efforts will be concentrated on performance testing to secure reliability in the system.

In addition, we aim to strengthen our position as a global supplier of key equipments for next-generation nuclear plants by securing integral forging manufacturing technology for nuclear power plant. We will also keep up investments to develop and commercialize new technologies related to renewable energy such as IGCC (Integrated Gasification Combined Cycle), wind power, and fuel cell energy.

Third, we will reinforce our operating system and organizational culture to secure a major presence on the global stage.

The groundbreaking for our plant in Vietnam took place this February, while the IMGB plant in Romania is operating in full swing. Expansion of our overseas operations calls for a corresponding upgrade in the capability and skills of our employees. We will benchmark the best practices of prominent global companies to cultivate a mind set and competency that match our growing international presence.

Last year, Doosan Heavy Industries introduced the “Winning Meeting” program to promote employee engagement. Winning Meeting is part of our business restructuring drive implemented since privatization. The program will foster a culture in which employees take the initiative to identify and resolve problems. A culture of engagement will motivate employees to play an active role in cost reduction efforts, which in turn will lead to enhanced profits for the company as a whole.

Fourth, labor and management will work together to strengthen mutual cooperation. The foundation for stronger ties was cemented when the two sides reached an agreement without any conflict in last year’s collective bargaining.

The year 2006 was particularly significant in terms of building two-way trust. Trust will provide the basis for labor relations centered on harmony and mutual growth.

Looking ahead, all of us at Doosan Heavy Industries will spare no effort to attain our goals for 2007. We remain firmly committed to maximizing performance in our ongoing businesses while exploring new opportunities to propel future growth.

We also continue to seek ways to shape Doosan Heavy Industries into a transparent and trustworthy company of global standards. To that end, we adopted an internal control system to enhance transparency last year. 

(CEO’s message at 44th regular shareholders’ meeting)