Sales fall 6% to 6.09 trillion won

A K21 infantry fighting vehicle, Chunmoo multiple-launch guided weapon system, Cheonggung-II medium-range surface-to-air missile system, Tigon wheeled armored vehicle and three unmanned vehicle variants, including the Arion SMET, conduct a mobility demonstration at the performance test ground of Hanwha Aerospace's Changwon Plant 2 on Oct. 14. [Hanwha]
A K21 infantry fighting vehicle, Chunmoo multiple-launch guided weapon system, Cheonggung-II medium-range surface-to-air missile system, Tigon wheeled armored vehicle and three unmanned vehicle variants, including the Arion SMET, conduct a mobility demonstration at the performance test ground of Hanwha Aerospace's Changwon Plant 2 on Oct. 14. [Hanwha]

Hanwha Aerospace reported third-quarter operating profit of 452 billion won ($338 million), a 46 percent decline from the same period last year, the company announced Thursday. Sales fell 6 percent to 6.09 trillion won over the same period.

The weaker results reflected a concentration of delivery schedules for major programs — including the second batch of K9 self-propelled howitzers bound for Poland — in the fourth quarter, as well as the effect of some shipments being brought forward into the second quarter.

The land defense division posted sales of 1.25 trillion won and operating profit of 21.7 billion won. Earnings are expected to improve markedly in the fourth quarter as the second batch of K9 and Chunmoo systems for Poland begins full-scale delivery and K9 programs for Egypt and Australia advance.

Despite the soft quarter, Hanwha Aerospace secured a series of export contracts with key countries. In August, the company signed an export execution contract with Spain's Indra Sistemas for the K9, marking its first entry into the Western European market. Hanwha Defense USA signed a prototype supply contract for the US Army's next-generation Mobile Tactical Cannon program. Last month, the company concluded a deal to export 18 Chunmoo systems to Croatia for approximately 410 million euros ($457 million), bringing the number of European nations operating the Chunmoo to four. Domestically, the company signed a mass-production contract for the Arion SMET multipurpose unmanned ground vehicle. As of the end of last month, the land defense division's order backlog stood at around 35 trillion won.

The aerospace division recorded sales of 659.9 billion won and an operating loss of 2.4 billion won, reflecting losses from the revenue-sharing program tied to increased deliveries of GTF engines.

Subsidiary Hanwha Systems posted sales of 831.6 billion won and operating profit of 99.1 billion won, up 30 percent and 60 percent, respectively, from a year earlier, driven by growth in defense sales including multi-function radar systems. Hanwha Ocean's operating profit rose 68 percent year-on-year to 485.7 billion won, boosted by a higher share of high-margin commercial vessel orders.

"The third quarter was affected by delivery schedule adjustments and one-time costs, but earnings will begin to recover in earnest from the fourth quarter," a Hanwha Aerospace official said. "At the Daejeon plant, we will prioritize safety above all else and work to minimize any disruption to production."


yeongdai@heraldcorp.com