1. What Happened at Daechang?

Daechang recorded sales of KRW 338 billion in H1 2025, continuing its growth trend, but its operating profit turned negative to KRW -8 billion, and net profit to KRW -16 billion. Compared to the operating profit of KRW 146 billion in Q1, the decline in Q2 is significant.

2. Why These Results?

External factors such as rising raw material prices, falling copper prices, and increased exchange rate volatility are analyzed as the main causes of the decline in profitability. The low operating rate of major production facilities (Siwha plant 43.1%, Dangjin plant 30.1%, Thailand subsidiary 15.4%) also negatively impacted profitability.

  • Rising Raw Material Prices: The company was unable to fully reflect the increase in raw material costs in sales prices.
  • Exchange Rate Volatility: While a rising KRW/USD exchange rate is favorable for exports, it increased cost burdens for Daechang, which has a high proportion of raw material imports.
  • Low Operating Rate: This led to an increase in fixed cost burden, worsening profitability.

3. What’s the Outlook?

The short-term outlook is negative. Declining profitability, inventory burden, and high debt ratio can put pressure on investor sentiment. However, efforts to secure new growth engines, such as lead-free brass rods and EV component materials, are positive factors in the medium to long term.

4. What Should Investors Do?

Short-term investment should be approached with caution. Closely monitor future quarterly earnings to assess profitability improvement, production capacity utilization improvement, and debt management. For long-term investment, it is necessary to evaluate the growth potential and risks of new growth engines in a balanced manner. The ability to manage raw material prices and exchange rate volatility is also a key checkpoint.