Hanwha Aerospace (012450) Q3 2024 earnings summary

Executive summary

• Q3 2024 marked the completion of a major spin-off, with Hanwha Vision and Hanwha Precision Machinery now classified as discontinued operations.

• Consolidated sales surged 62% year-over-year to KRW 2.63 trillion, and operating profit increased more than fivefold to KRW 477.2 billion, driven by Land Systems and export growth.

• Net profit reached KRW 330.4 billion, reversing a loss from the prior year, reflecting improved profitability and operational leverage.

• Major contracts were signed in Land Systems (K9 SPH with Romania) and Hanwha Systems (M-SAMII MFR Radar with Saudi Arabia), supporting a robust order backlog.

• The company completed significant M&A and restructuring, including the absorption of defense subsidiaries and an in-kind split of certain business units.

Financial highlights

• Q3 2024 consolidated sales: KRW 2.63 trillion (+62% YoY); operating profit: KRW 477.2 billion (+458% YoY); net profit: KRW 330.4 billion (up from a loss YoY).

• Pretax profit for Q3 was KRW 375.2 billion, a turnaround from a loss in the same period last year.

• Total assets at quarter-end were KRW 20.92 trillion, with liabilities at KRW 16.69 trillion and a net debt-to-equity ratio around 100%.

• Net debt increased 110% YoY to KRW 4.28 trillion; total debt/equity ratio rose to 133%.

• Operating profit margin improved to 18.1% (up from 5.3% YoY); net profit margin reached 12.6%.

Segment performance

• Land Systems: Sales up 117% YoY; operating profit up 715% YoY, driven by export and domestic demand.

• Hanwha Systems: Q3 sales were KRW 1.66 trillion, more than doubling YoY, with operating profit at KRW 439.9 billion.

• Aerospace: Sales up 22% YoY to KRW 477.9 billion, but operating profit was negative KRW 6 billion due to higher GTF engine-related losses.

• Setrec Eye sales grew 75% YoY to KRW 43.7 billion, with a turnaround to KRW 0.8 billion in operating profit.

• Security and industrial equipment (now discontinued): KRW 1.58 trillion revenue, KRW 124.6 billion operating profit.