Hanwha Aerospace (012450) Q2 2024 earnings summary

Executive summary

• Q2 2024 consolidated sales reached KRW 2,786 billion, up 46% year-on-year, with operating profit at KRW 358.8 billion, a four-fold increase year-on-year.

• Net profit declined 47% year-on-year to KRW 159.9 billion due to a high base effect from last year's one-time derivative gain and Overair convertible bond expenses.

• Major business segments include aerospace, defense, security, industrial equipment, IT services, and space, with defense accounting for 56.7% of consolidated revenue.

• Strong export growth in the land systems segment and robust performance from Hanwha Systems drove overall results.

• The company completed the integration of defense subsidiaries and is proceeding with a planned spin-off of security and industrial equipment businesses effective September 2024.

Financial highlights

• Pretax profit for Q2 was KRW 138.9 billion, down 59% year-on-year.

• Land Systems sales up 122% year-on-year to KRW 1,333 billion; operating profit up 1,089% to KRW 261 billion.

• Aerospace sales increased 40% year-on-year to KRW 562 billion; operating profit up 36% to KRW 8 billion.

• Total assets at KRW 22,181.2 billion and liabilities at KRW 17,354.5 billion, both up from end-2023.

• Net debt-to-equity ratio increased to 65% from end-2023.

Outlook and guidance

• Land systems export shipments expected to grow quarter-on-quarter through Q4 2024, with Q3 and Q4 volumes larger than Q2.

• 2024 guidance maintained at 60 K9s and 30 Chunmoos or more, with upside potential.

• The planned spin-off of security and industrial equipment businesses is expected to enhance business focus and operational efficiency.

• Gradual growth in performance expected for 2025 based on delivery schedules.

• Ongoing investments in R&D and production capacity are aimed at strengthening competitiveness in core markets.