Hanon Systems (018880) Q3 2024 earnings summary

Executive summary

• Revenue grew 8.2% year-over-year in 3Q 2024, driven by favorable FX, new BEV launches, and cost recovery actions.

• Operating income surged 391.1% year-over-year in 3Q 2024, reflecting improved pricing and cost controls.

• Net loss persisted due to significant net interest expense and FX impacts, with Q3 2024 net loss attributable to controlling interests at 47.5 billion KRW.

• The company operates a single business segment focused on automotive thermal management systems, with a global manufacturing footprint and diversified customer base.

Financial highlights

• 3Q 2024 revenue: KRW 2,500B (+8.2% YoY), EBITDA: KRW 254B (+48.6% YoY), operating income: KRW 94B (+391.1% YoY).

• 3Q YTD 2024 revenue: KRW 7,463.1B (+5.6% YoY), EBITDA: KRW 712B (+7.6% YoY), operating income: KRW 233.1B.

• Gross margin for Q3 2024 was 9.4%, down from 10.2% in Q3 2023, due to increased raw material and logistics costs.

• 3Q YTD 2024 net loss: KRW -41B, compared to net income of KRW 113B in 3Q YTD 2023.

• Basic and diluted EPS for Q3 2024 were both negative at -89 KRW, compared to 96 KRW in Q3 2023.

Outlook and guidance

• New business wins on track, with strong order flow expected in 4Q 2024.

• Profitability expected to improve through re-win orders, efficiency gains, and price adjustments.

• New launches in 2025 anticipated to boost sales and margins.

• Management expects continued revenue growth driven by global OEM demand, but notes ongoing margin pressure from raw material costs and currency volatility.

• The company is focused on expanding its presence in the electric and hybrid vehicle market segments and enhancing operational efficiency.