[Post-IPO] Daemo Faces Export Slump Due to COVID-19... Annual Performance Deteriorates

[Asia Economy Reporter Hyunseok Yoo] Daemo Engineering (hereinafter Daemo), a construction machinery equipment specialist company, has been suffering from deteriorating performance every year since entering the stock market in 2019. The main cause of the performance decline is attributed to the worsening construction market due to COVID-19 and other factors.

Daemo was established in 1989 as a company specializing in attachments and special-purpose construction machinery. It manufactures various types of attachments that are attached to excavators. Using these equipment, tasks such as rock breaking, beam and rebar cutting, road crushing, and building demolition are possible. The attachments include products such as hydraulic breakers (equipment that breaks rock), shears (cutters), and crushers.

The performance has been deteriorating every year. Sales and operating profit decreased from 51 billion KRW and 3.9 billion KRW in 2018 to 45 billion KRW and 900 million KRW in 2019, and further to 41.2 billion KRW and 76 million KRW last year. In the first quarter, sales recorded 11.6 billion KRW with an operating profit of 460 million KRW. Compared to the same period last year, sales dropped by 26.08% and operating profit plummeted by 81.68%.

Daemo’s product lineup is divided into hydraulic breakers, quick couplers, other attachments, special equipment and piping, and parts. Among these, hydraulic breakers accounted for the largest portion of sales last year at 23.1 billion KRW. This was followed by special equipment and piping (5.6 billion KRW), parts (4.5 billion KRW), quick couplers (3.2 billion KRW), and other attachments (2 billion KRW).

Sales of hydraulic breakers, which hold the largest share, are declining. Hydraulic breaker sales decreased from 30.7 billion KRW in 2018 to 26 billion KRW in 2019. Additionally, first-quarter sales were 7 billion KRW, down 32.18% from 10.3 billion KRW in the same period last year.

Daemo’s export ratio is higher than domestic sales. Exports accounted for 70% of total sales in the first quarter. However, export revenue has been decreasing annually due to COVID-19 and other factors.

In its quarterly report, the company explained that exports had been increasing from 2016 to 2018 but began to decline from 2019 due to a slowdown in the Indian market and the global construction market deterioration caused by COVID-19, which led to worsening performance. A company official stated, "In the first quarter of last year, exchange rates adversely affected our performance."

In particular, despite increased sales at the Indian production subsidiary, losses continue. During the IPO briefing, Daemo announced plans to utilize the Indian subsidiary as a production and sales base and a hub for global outsourcing. The Indian subsidiary, DAEMO Engineering India Pvt. Ltd., recorded sales of 42.62 million KRW and a net loss of 44.82 million KRW in the first quarter.

A Daemo official emphasized, "Despite the recession, our existing customers remain, so there is no problem with the company’s fundamental strength," adding, "Once COVID-19 eases, the construction market will improve, and we expect to recover our performance."

This content was produced with the assistance of AI translation services.