Daedong posts record quarterly sales, shares surge 14%

Daedong, a South Korean agricultural machinery maker, posted record quarterly sales in the second quarter of this year, with operating profit surging more than 60 percent from a year earlier. The strong results — achieved despite a global farm equipment market downturn — sent the company's share price soaring Monday, briefly hitting the daily upper limit during trading.

Daedong disclosed in a preliminary filing Monday that its second-quarter consolidated sales reached 467.1 billion won ($329 million) and operating profit came in at 41.2 billion won. Sales rose 12.7 percent from the same period a year ago, while operating profit jumped 64.3 percent. The operating profit margin stood at 8.8 percent.

The second-quarter sales figure surpassed the previous quarterly record, set in the second quarter of 2022, by about 2.1 percent, marking a new all-time high on a quarterly basis. Net profit for the period was 21.4 billion won, a return to the black after a net loss in the first quarter.

The company also set a first-half record. Daedong's consolidated sales for the first half of this year reached 844.8 billion won, up 5.4 percent from the same period last year. First-quarter sales were limited to 377.7 billion won, but second-quarter sales climbing to 467.1 billion won drove the overall top-line expansion.

The earnings improvement was driven by a better product mix in North America and a stronger retail network. Daedong focused on optimizing its sales composition for tractors and compact construction equipment in North America while boosting dealer competitiveness. The company also moved to strengthen its sales base in Europe and South Korea.

Particularly notable is that Daedong improved its earnings against the broader industry trend. The North American agricultural machinery market shrank 13 percent in the first half compared with a year earlier, while the domestic market contracted 3.4 percent. Growth in the European market was limited to 0.7 percent. Daedong improved both sales and profitability even as overall market demand remained sluggish.

The parts business also showed growth. Daedong said parts sales rose 20 percent in the first half from a year earlier. The company is also expanding its equipment management operations using a connected platform to grow recurring revenue — including parts and service — generated after initial equipment sales.

The strong results sent shares sharply higher Monday. Daedong's stock briefly touched the daily price limit of 8,740 won during the session. As of 3:10 p.m., the share price was trading at 7,660 won, up 13.82 percent from the previous session.