Q3 sales at 2.66 trillion won, down 1.8% on-year

Cost-of-sales ratio improves to 88.5%

Company eyes ESS, AI data center thermal management

The climatic wind tunnel at Hanon Systems' R&D center in Daejeon. The facility replicates real-world driving conditions — including wind speed, temperature, humidity and solar radiation — to test the performance of vehicle air-conditioning and thermal management systems. [Hanon Systems]
The climatic wind tunnel at Hanon Systems' R&D center in Daejeon. The facility replicates real-world driving conditions — including wind speed, temperature, humidity and solar radiation — to test the performance of vehicle air-conditioning and thermal management systems. [Hanon Systems]

Hanon Systems, the automotive thermal management solutions affiliate of Hankook & Company Group, said its third-quarter consolidated operating profit rose 26.6 percent on-year to 120.6 billion won ($90 million), even as sales edged down 1.8 percent over the same period.

Third-quarter sales came in at 2.66 trillion won, down from 2.71 trillion won a year earlier and 7.6 percent below the previous quarter's 2.88 trillion won. The company attributed the decline to temporary volume adjustments by customers and the impact of exchange rates.

Operating profit climbed 16.3 percent from the previous quarter's 103.7 billion won, with the operating profit margin reaching 4.5 percent.

Cumulative sales for the first three quarters reached 8.28 trillion won, up 1.2 percent on-year, while cumulative operating profit surged 77.9 percent to 321.5 billion won.

The company said improvements to its cost structure drove the profit gains. The cost-of-sales ratio fell to 88.5 percent in the third quarter from 89.1 percent the previous quarter, and the selling and administrative expense ratio also declined from 7.3 percent to 7.0 percent. On a cumulative nine-month basis, the cost-of-sales ratio improved 2.0 percentage points to 89.1 percent from 91.1 percent a year earlier.

By region, growth in European sales was offset by volume losses stemming from production disruptions at major domestic customers, the company said. The electrification segment's share of sales rose to 33 percent in the third quarter from 31 percent in the second, driven by expanded supply of electrification products to key customers as electric vehicle demand grew in Europe.

Hanon Systems is also pursuing business diversification. This year it launched an aftermarket business in earnest, beginning product sales through T-Station outlets in South Korea and securing an initial order from European automotive parts distributor Intercarss. The company is also exploring opportunities to apply its thermal management technology in off-road mobility sectors, including agricultural machinery, construction equipment and defense.

The company is extending its technology beyond the automotive sector. It has begun developing thermal management solutions for energy storage systems, power conversion systems and solid-state transformers for power semiconductors. It also plans to enter the server thermal management market for AI data centers in a phased approach.

Vice Chairman Lee Su-il, chief executive of Hanon Systems, said fundamental process improvements and operational efficiency efforts were delivering stable business results despite uncertainty in global markets. "Going forward, we will respond flexibly to changes in the electrification market, uncover new growth opportunities based on our accumulated thermal management expertise, and continue to strengthen the foundation for sustainable growth," Lee said.


eyre@heraldcorp.com