Hanwha Systems (272210.KS) posted strong third-quarter results on robust defense exports.
The company said on the 27th that preliminary third-quarter revenue came to 831.6 billion won ($582 million) and operating profit to 99.1 billion won ($69.4 million). Revenue rose 30.1% and operating profit climbed 60.5% from a year earlier.
Defense exports drove the earnings. Large-scale export projects, including Cheongung-II multifunction radars (MFR) bound for the United Arab Emirates, Saudi Arabia and Iraq, lifted profitability. Major domestic programs also contributed, such as production of active electronically scanned array (AESA) radars and avionics for the KF-21 fighter jet.
In the information and communications technology division, IT development projects for group affiliates underpinned stable earnings, including a next-generation system for Hanwha Life Insurance and an enterprise resource planning system for Hanwha Philly Shipyard.
As of the end of the third quarter, the order backlog stood at 8.3956 trillion won in defense and 469.7 billion won in ICT, for a combined 8.8653 trillion won.
Net profit fell 97.5% from a year earlier to 3.8 billion won, reflecting accounting losses tied to discontinued operations at Philly Shipyard. Hanwha Systems disclosed last month that subsidiary HS USA Holdings would sell its entire 60% stake in Philly Shipyard, valued at 325.1 billion won, to Hanwha Defense USA Shipbuilding on the 31st. As a result, earnings related to the shipyard were classified as discontinued operations. "The losses do not affect revenue or operating profit," the company said. "The final completion and settlement of the transaction will be reflected in future accounting."
Hanwha Systems expects order growth in the 20% range from a year earlier in both divisions this year, driven by expanding exports and space business orders in defense and rising IT demand, including ERP projects for affiliates, in ICT.