Daedong brings in KRW 362.4 billion in sales over Q1... Company will look to improve in Q2 targeting the peak season in North America
Daedong brings in KRW 362.4 billion in sales over Q1... Company will look to improve in Q2 targeting the peak season in North America
- Tractor market contracts 15% in North America and 12% in Korea compared to the first quarter of 2023... Daedong's consolidated sales dropped by approximately 9.6%
- Company is looking to bounce back by strategically targeting the peak season in North America and strengthening its sales of small construction equipment through promotional offers tailored to specific regions
- Daedong will also make a strong push for its future businesses... It plans on launching transport robots and selling precision agricultural solutions targeting the Korean market in the fourth quarter
Daedong (Co-CEO: Kim Jun-Sik and Won Yu-Hyun), Daedong Group's parent company and a leading future ag-tech company, announced on May 15 that its sales revenue and operating profit (consolidated basis) for the first quarter of 2024 came in at KRW 362.4 billion and KRW 11.6 billion, respectively.
This is a 9.6% drop in sales compared to the same period last year. As of the first quarter of this year, the market for agricultural machinery in Korea and North America shrank by 12% (based on Nonghyup Bank loans) and 15%, each, compared to the previous year. In Korea, the market is believed to have been driven down due to a decline in the real income of farmers (higher production costs, lower grain prices) and a reduction in government subsidies. As for North America, the peak sales season being pushed back due to abnormal temperatures (cold waves and heavy precipitation) played a role in dampening the market, but the main culprit was a decline in overall consumer sentiment, including farms, resulting from high interest rates and the looming shadow of the upcoming presidential election in November.
Daedong plans to make up for its somewhat underwhelming performance by strategically targeting the peak season in North America, which could help the company maximize its second-quarter sales in North America. In the North American market, Daedong has sold an average of 80,000 tractors (100 horsepower or less) in the second quarter alone, accounting for more than 30% of its annual sales. To this end, the company has a two-track strategy, one that aggressively pursues customized promotions based on advanced regional market analysis, and another that focuses more on targeting the Compact Construction Equipment (CCE) market.
More specifically, in order to sell mid- to large-sized tractors in the 60~140 horsepower range, Daedong's flagship large tractor, HX, and the mid-sized tractor GX, which were both launched worldwide this year, will be used to expand the lineup of tractor + implement packages. The company also plans to offer interest-free installment programs for tractors, and an initial purchasing program for new dealers. In addition, Daedong plans to focus on targeting the sub-30 horsepower market where it has been the most competitive (Daedong holds a 20% M/S in North America).
To increase CCE sales, the company is recruiting as many dealers in North America specializing in construction equipment as possible, and it is strengthening its CCE product and sales training for existing KIOTI agricultural machinery dealers. Daedong says its goal is to sell at least 1,000 CCE units in North America this year. The global CCE market is growing at an average of 4% per year. The North American market grew by roughly 15% from 107,000 units in 2021 to 123,000 units in 2023, and is expected to grow to 131,000 units or so this year.
Outside North America, Daedong is hoping to direct more attention to the Turkish market, which is the world's fourth-largest tractor market in the world (annual sales of approximately 60,000 units). At the end of last year, the company signed a contract with Aral Group to supply tractors (20~140 horsepower) worth approximately KRW 350 billion over five years (starting in 2024). In March of this year, Daedong also joined the “2024 Konya Agricultural Expo,” the largest agricultural machinery exhibition in Türkiye to announce the fact that KITOI is indeed ready to launch in Türkiye. In June, the company plans to start the “KIOTI Road Show,” which involves carrying popular KIOTI tractors such as HX and GX on large trailers and touring major sales regions to host local exhibitions. The program will help raise brand awareness and recruit more local dealers.
Meanwhile, to boost domestic sales, Daedong will actively pursue means to “actualize its future business.” To that end, the company plans to expand its sales of smart agricultural machinery offering high added value thanks to high-tech features (e.g. autonomous driving) useful to large-scale agricultural corporations in Korea, including the Korea Central Association of Fields Co-op, which Daedong is working with this year to develop its precision agriculture business. Furthermore, the company plans to promote domestic sales of agricultural robots such as transport robots and pest control robots in the fourth quarter and generate stronger sales by soft launching precision agriculture solution services for field and greenhouse crops such as rice, beans, garlic, strawberries, and basil.
