DK&D "No Impact from COVID-19... Q1 Earnings Up"

[Asia Economy Reporter Jang Hyowon] The entrance of the DK&D factory was filled with yellow boxes. All were synthetic leather products waiting to be exported. The boxes were labeled with destinations such as Munich, Germany, and Shimonoseki, Japan. Numerous types of products made at the DK&D Ansan factory are spreading worldwide.

Exterior view of DK&D Ansan Factory.

Especially in the first quarter of this year, despite the global economic downturn caused by the COVID-19 pandemic, the DK&D factory was running non-stop due to the flood of orders. As a result, sales and operating profit for the first quarter are expected to increase by about 40% and 50%, respectively.

Minseok Choi, CEO of DK&D, cited the company’s strength in being able to grow despite COVID-19 as its “small-lot, multi-product production” system.

CEO Choi explained, “While other companies mainly focus on footwear and automotive products, we have a diverse product portfolio including clothing and headsets through a production system based on orders. Having a system that is not concentrated in one area is our competitive advantage.”

DK&D products are supplied to various clothing companies such as Supreme, Wolford, Valentino, Callaway, and TaylorMade. Sony Japan has been a long-time customer for headsets. Of course, the company also supplies products to global sports brands and domestic automotive companies. In fact, sales related to the launch of new cars by H Automobile drove the first quarter’s performance.

He added, “Also, since most of the company’s executives and employees come from engineering backgrounds, we provide technical engineering consulting when selling products, allowing us to jointly develop with buyers through direct transactions rather than agent deals, which is another strength.”

Inside the DK&D Ansan Factory.

Founded in 2000, DK&D is a company that produces synthetic leather and nonwoven fabric. The Ansan factory producing synthetic leather operates one wet line producing 120,000 yards per month and two dry lines producing 400,000 yards per month. The Vietnam factory produces 1.2 million meters per month of needle-punched nonwoven fabric for synthetic leather. The Chinese subsidiary distributes raw materials related to synthetic leather products.

DK&D also possesses core technology for manufacturing eco-friendly products. Moving away from traditional solvent-based polyurethane (PU) and solvent-based adhesives, they produce eco-friendly products using water-based PU, solvent-free adhesives, and silicone resins. They were the first in Korea to commercialize furniture products applying solvent-free PU and obtained the Korean Fire Institute (KFI) certification for flame-retardant furniture products.

Going forward, DK&D plans to expand its business in sanitary materials used in masks and protective clothing, as well as IT material-related products. With the rise of the “K-quarantine” status due to COVID-19, demand for masks and protective clothing is expected to increase. Additionally, the IT material industry, such as smartphone cases, is anticipated to have growth potential.

CEO Choi said, “There are currently projects under contract negotiation, so we expect sales increases in sanitary materials and IT materials to become visible from the second half of the year.”