Aiming for Growth Amid Economic Downturn
Daedong Targets Key Global Markets and New Opportunities
Daedong, an agricultural machinery company, is set to rebound its performance this year through quantitative growth in key global markets such as North America and Europe. The company also plans to explore and pioneer new markets like Ukraine. Amid a global agricultural machinery market downturn caused by prolonged high interest rates and increased agricultural production costs, Daedong aims to overcome challenges through product differentiation by applying new technologies and diversifying its lineup.
On the 11th, Daedong announced that despite the stagnation in major overseas agricultural machinery markets including domestic, North American, and European markets, it has raised its sales target for this year compared to the previous year. Daedong recorded sales of 1.4128 trillion KRW last year, a 1.4% decrease from the previous year. While sales managed to maintain the previous year's level, operating profit was only 16.5 billion KRW, down 74.8% year-on-year. Net loss amounted to 51.9 billion KRW, marking a return to deficit.
The biggest cause of the poor performance was the stagnation of the North American market, which accounts for about 60% of total sales. Last year, due to the impact of high interest rates, demand for high-priced tractors did not recover easily, and increased selling and administrative expenses were incurred to respond to competitive promotions locally. Logistics costs also increased, with shipping rates rising about 40% compared to the previous year. Investments in future new businesses and increased interest expenses also contributed to the decline in performance.
Daedong plans to seek a breakthrough in the North American market by focusing on medium and large tractors with over 60 horsepower. This is a continuation of its efforts to improve the tractor business structure from small and medium-sized tractors under 60 horsepower to medium and large sizes despite the agricultural machinery market downturn. The goal is to increase the North American market share from the current 8% to 10% this year. To achieve this, Daedong will equip all North American export tractors with telematics (TMS), a wireless communication feature. This function enables remote control services, smart remote diagnostics, and data collection.
In the European market, Daedong plans to diversify its tractor product lineup to secure at least 100 billion KRW in sales. Daedong has targeted the medium and large tractor market in Europe as well, achieving double-digit sales growth last year compared to the previous year and increasing the share of medium and large tractors in sales from the 20% range to 40%. Additionally, Daedong will actively promote its small construction equipment (CCE) overseas business and plans to introduce new products to the European market in the second half of this year.
Daedong also has high expectations for new markets such as Ukraine, where opportunities to participate in post-war reconstruction projects have opened. Ukraine is one of the world's three major granaries, with annual tractor imports exceeding 1 trillion KRW. Last year, Daedong signed a contract with a Ukrainian agricultural machinery importer to supply tractors worth 30 billion KRW over three years and completed the first shipment last month. This year, Daedong plans to expand its business in Ukraine in earnest, participating in local agricultural reconstruction and strengthening its market position through various channels such as supporting the capacity building of young farmers.
Precision agriculture and transport robots, which Daedong has been diligently preparing as one of its future businesses, will also begin full-scale commercialization this year. Over the past four years, Daedong has accumulated vast data through precision agriculture demonstrations on 410,000 pyeong of farmland. It also plans to launch an autonomous work transport robot in the first quarter. A Daedong official stated, "This year, we will first introduce new services and products such as precision agriculture and transport robots, which did not exist before, in the domestic market, build a growth foundation and successful experience for future businesses, and then expand into the global market."
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