Daedong, No.1 in Agricultural Machinery, Q1 Sales Up 20%... Operating Profit Down 17.8%

Achieved 356.8 Billion KRW in Q1 Sales... Highest Quarterly Record
Operating Profit Down 17.8% Due to Rising Freight and Raw Material Costs
"Will Drive Innovative Growth by Strengthening New Businesses Like Smart Farm and Mobility"

Daedong Kioti Tractor Work Photo. [Photo by Daedong]

[Asia Economy Reporter Kwak Minjae] Daedong, the No.1 agricultural machinery company in Korea, saw a significant increase in sales in the first quarter of this year, driven by growth in overseas exports. However, operating profit declined due to rising logistics costs and raw material prices caused by the global supply chain disruption.

Daedong announced on the 16th that its consolidated sales from January to March this year reached 356.8 billion KRW, up 20% compared to the same quarter last year. Operating profit was 21.6 billion KRW, down 17.8% year-on-year, and net profit was 12.6 billion KRW, a decrease of 40.9% compared to the previous year.

The sharp rise in sales is attributed to increased overseas exports. Overseas sales grew by 37.5% year-on-year. In the first quarter of the previous year, the overseas-to-domestic sales ratio was 56% to 44%, but this year, due to export growth, the overseas sales ratio rose to 65%. In particular, the export brand Kioti sold 22,000 units in North America, a 32% increase from the previous year. The North American Kioti market share, which was about 6% in the first quarter last year, also grew to approximately 7% this year.

To expand exports, Daedong has established a parts supply chain capable of producing 50,000 tractors annually, along with a global-level production and quality management system. Centered on the newly established GBD division last year, the company plans to explore distribution channels in emerging markets such as Southeast Asia, Africa, and Latin America, in addition to existing markets in North America, Europe, and Australia. Domestically, Daedong aims to increase market share through differentiated customer and product service management and accelerate its future agriculture platform business by launching the agricultural machinery remote monitoring service ‘Daedong Connect’ in the second quarter, with plans to expand its application to small and medium-sized tractors.

On the other hand, operating profit declined due to increased logistics costs from ocean freight and rising raw material costs caused by the global supply disruption. However, Daedong expects positive performance in the second quarter. A Daedong official stated, “We temporarily experienced reduced profitability because we did not pass on the increased costs to prices for products pre-contracted with overseas dealers last year. In April, we raised prices in more than 70 countries including North America and Europe, and through the ‘Global Quality Innovation System Establishment TFT,’ we are enhancing cost competitiveness by innovating quality and diversifying supply chains.”

Won Yuhyun, CEO of Daedong, said, “We will capture both growth and profitability by providing greater value to customers through the Daedong and Kioti brands. We will also continue innovative growth by strengthening new businesses such as smart farms and mobility for the future, as well as R&D investment.”

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