Daedong’s agricultural equipment under the brand name of Kioti is seen in this undated photo. Courtesy of Daedong
By Park Jae-hyuk
Agricultural machinery manufacturer Daedong succeeded in improving its profitability, in contrast to rival TYM, which experienced a sharp decline in earnings due to falling demand for farming equipment both domestically and internationally.
Daedong posted sales of 412.4 billion won ($310 million) and an operating profit of 36.1 billion won in the second quarter.
Although revenues dropped 5 percent year-on-year, operating profit jumped 22 percent.
It also showed a quarter-on-quarter increase in profitability, compared to a first quarter operating profit of 11.6 billion won.
In contrast, TYM’s second-quarter operating profit dropped 60 percent year-on-year to 12 billion won, while its revenues fell 11.7 percent to 215.2 billion won.
The company even failed to show a significant improvement in earnings from the previous quarter, as it posted 10.7 billion won in operating profit from January to March.
Daedong attributed its earnings recovery to increased sales of larger agricultural machinery and small construction equipment in North America, Europe, and Australia, offsetting the decline in demand for small agricultural equipment from U.S. hobby farmers.
“The task force for our North American business thoroughly analyzed the market, so we focused on promoting our products during the peak season of the second quarter to maximize profits,” a Daedong official said.
TYM attributed its earnings decline to the costs of promotional events aimed at counteracting the drop in sales in North America and an increase in ocean freight rates.
“The sluggish North American market dragged down our revenues and operating profit, but our domestic sales have increased and our debt ratio has decreased,” a TYM official said.
Both companies are set to overcome the current market conditions through the active use of artificial intelligence (AI) technologies.
During the fourth quarter, Daedong plans to begin selling agricultural robots equipped with an AI developed by Daedong AI Lab, a subsidiary founded this year to develop technologies for robotics and software.
“We will deal with the current situation and pursue our future businesses by establishing more efficient strategies through market analyses,” Daedong CEO Won Yu-hyun said.
TYM aims to develop autonomous agricultural equipment technologies using generative AI through its partnership with SK C&C.
The company will also hold a trade show in the Philippines in October to expand its presence in Southeast Asia.
