Dynamic Design Turns Profitable in Q1... Full-Scale Profitability and Financial Structure Improvement Underway

Dynamic Design succeeded in turning a profit on a consolidated basis in the first quarter of this year, demonstrating improvements in both profitability and financial stability.

On May 14, Dynamic Design announced via public disclosure that for the first quarter of 2026, its consolidated revenue reached 27,090 million won, with operating profit at 1,118 million won and net profit at 716 million won. Compared to the same period last year, the company showed revenue growth and achieved a turnaround to profitability in both operating and net income.

Consolidated revenue increased by 35.1% compared to 19,989 million won in the same period last year. Operating profit improved from an operating loss of 192 million won in the previous year to a profit, while net profit also turned positive from a net loss of 1,665 million won to a profit of 716 million won.

As a result, the operating margin rose from minus 1.0% to 4.1%, and the net profit margin improved from minus 8.3% to 2.7%, reflecting recovery in both growth and profitability.

The improvement in results on a standalone basis was even more pronounced. Standalone revenue was 15,642 million won, an 18.3% increase year-on-year, and operating profit reached 1,440 million won, up 216.7%. Net profit also turned from a loss of 737 million won to a profit of 1,792 million won.

The company explained that these results were due to recovering core business competitiveness and improvements in cost structure. In particular, the cost-of-sales ratio fell by 6.9 percentage points from 79.5% to 72.6%, contributing significantly to profitability enhancement.

The company cited a combination of factors such as expansion of high value-added product sales, ongoing investment in research and development (R&D), facility upgrades, and process improvements for productivity gains.

Accordingly, on a standalone basis, the operating profit margin was 9.2% and the net profit margin reached 11.5%, indicating the potential for a stable profit structure going forward.

Financial soundness is also on an improving trend. The standalone debt ratio decreased from 76.69% to 67.31%. The company stated that the turnaround in operating and net profit is gradually restoring financial stability.

Previously, on May 6, the company also disclosed plans for a capital reduction without compensation and transfer of capital reserve to retained earnings to improve its financial structure and offset accumulated deficits.

At the extraordinary general meeting of shareholders scheduled for June 15, the company plans to propose a 10-for-1 capital reduction without compensation, consolidating every ten common shares with a par value of 500 won into one common share of the same par value. As a result, paid-in capital will decrease from approximately 2,110 million won to about 210 million won.

Following the capital reduction, the number of outstanding shares will be adjusted from 42,236,668 shares to 4,223,666 shares.

The company plans to use the approximately 19 billion won reduction in capital to offset accumulated deficits, and to further transfer around 133.2 billion won in additional paid-in capital to retained earnings by reducing it accordingly.

The company expects that, once these procedures are complete, the accumulated deficits of about 152.2 billion won on a standalone basis as of the end of 2025 will be fully eliminated. It also anticipates that financial normalization and the foundation for future dividend resources can be secured without changes to total equity.

In particular, the company emphasized that this capital structure improvement is an accounting-based financial enhancement process that involves no cash outflow, and expects it to have a positive impact on strengthening financial stability, attracting future investment, and normalizing management.

Meanwhile, Dynamic Design was granted a grace period by the Korea Exchange until April 14, 2027, regarding the recent auditor's opinion for the latest business year, and is currently working to resolve related issues.

A company representative stated, "Based on first-quarter performance improvement and efforts to normalize the financial structure, we will continue to enhance profitability and financial stability," adding, "We will do our utmost to expedite management normalization and regain market trust."

This performance is significant in that Dynamic Design has not only succeeded in turning a profit through strengthening its core business competitiveness and improving cost structure, but is also accelerating financial normalization through capital reduction without compensation and addressing accumulated deficits.

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