Profits Lag Revenue Growth... Link Solution: "Warming Up for the New Plant's Launch"

Link Solution, a company specializing in 3D printers, has continued to grow its business since going public but has yet to return to profitability. The company said this was due to upfront spending on customer proof-of-concept (PoC) work and prototype testing ahead of the full-scale launch of its new Daejeon plant, which is scheduled for completion in the second half of this year.

According to the Financial Supervisory Service's electronic disclosure system, Link Solution posted consolidated revenue of 5.8 billion won in the first half of this year, up 74% from 3.3 billion won in the same period last year. Its operating loss, however, widened to 8.3 billion won from 3.9 billion won. The cost-of-sales ratio rose to 97% from 76% in 2024.

The main reasons for the wider loss were sharp increases in raw material usage and labor costs. According to its semiannual report, the cost of raw materials and other items used in the first half of this year totaled 5.2 billion won, up 218% from 1.6 billion won in the same period last year. Employee compensation also rose 34%, from 1.8 billion won to 2.4 billion won. Recurring research and development expenses also totaled 3.4 billion won, more than four times the amount recorded in the same period last year.

The company said the increase in costs was due to preparations for the completion of its new 3D-printing foundry in Daejeon. Link Solution is building an automated foundry in the Daejeon area with an investment of about 50 billion won in facilities. The plant will have a total floor area of 3,248 pyeong, with one basement level and seven above-ground floors, and is targeted for completion in the second half of this year. After completion, the company plans to begin full-scale production and supply of high-value-added components from the plant to advanced industries such as mobility, defense, aerospace, and robotics.

To that end, Link Solution is currently conducting more than 1,000 PoCs with multiple large corporate customers. The company said it performed some technical validations free of charge to convert them into mass-production orders immediately after the plant begins operations, incurring upfront raw material costs for metal powder, resin, and other materials used in repeated prototype printing.

The company has also been recruiting specialized personnel to begin production as soon as the plant is completed. Link Solution's headcount rose from 78 at the end of last year to 94 at the end of the first half of this year, an increase of 16, or 21%, in six months. In particular, the number of technical staff increased by 12, from 47 to 59, to prepare processes and mass production.

A Link Solution representative said, "Operating losses widened because we first made early-stage investments in hiring, research and development, and process-condition validation to secure our competitiveness in foundry mass production. With consolidated gross profit turning positive at 1.1 billion won in the second quarter of this year, for a gross margin of 26%, we will seek to achieve operating profitability after the Daejeon foundry begins operations in the second half of the year by converting PoCs into actual mass-production orders and improving utilization rates and yields."

Meanwhile, some have raised questions about the accounting treatment and profitability of certain Link Solution revenues. Key issues cited included whether it was appropriate to classify revenue from supplies involving external equipment as sales, as well as the profitability of some transactions.

In response, Link Solution said, "Even when using external equipment at customers' request, we combine it with our engineering capabilities, including our monitoring system, process design, commissioning, and quality assurance, and classify the resulting revenue as product sales, among other categories, under K-IFRS. Regarding the profitability of some transactions, we are pursuing our business with a focus on improving our competitiveness and profitability over the medium to long term, rather than securing short-term revenue."

Link Solution also plans to supplement its disclosures regarding its continued losses since going public. It will provide comprehensive information in its annual business report and include any necessary details in future periodic reports. A Link Solution representative said, "We will comprehensively review the contract terms, the work actually performed, and the accounting standards, and reflect them more carefully in future disclosures."

This content was produced with the assistance of AI translation services.