Hanwha Systems swings to Q1 loss on equity losses tied to US shipyard
Seoul, April 27
Hanwha Systems Co., the defense solutions arm of Hanwha Group, said on Monday it swung to a net loss in the first quarter from a year earlier, citing substantial equity losses tied to its US shipyard investment.
For the three months ended March, the company reported a net loss of 95.75 billion won ($65 million), compared with a net profit of 24.36 billion won a year earlier, reports Yonhap news agency.
The decline was largely attributed to increased equity losses from Hanwha Philly Shipyard in Philadelphia, which were exacerbated by heavy snowfall in the northeastern United States during January and February, a company official said.
Hanwha Systems holds a 60 percent stake in the U.S. shipyard, while the remaining 40 per cent is owned by affiliate Hanwha Ocean Co.
Hanwha Group acquired the shipyard for 140 billion won in 2024 as part of a strategy to expand into the US shipbuilding market, with the long-term goal of securing contracts from the U.S. Navy.
It marked the first acquisition of a US shipyard by a South Korean shipbuilder and is considered a key asset in a Seoul-backed initiative dubbed "Make American Shipbuilding Great Again" (MASGA).
Acquisition-related costs have continued to weigh on earnings.
Despite the net loss, operating profit rose 1.9 per cent to 34.28 billion won in the first quarter from 33.63 billion won a year earlier, while sales increased 16.9 per cent to 807.09 billion won from 690.1 billion won.
The company said revenue growth was driven by exports of multifunction radars for the Cheongung-II missile system to the United Arab Emirates and Saudi Arabia.
Looking ahead, the company expects losses at the Philadelphia shipyard to narrow significantly this year, supported by planned vessel deliveries, the official said.
Meanwhile, another firm HS Hyosung Advanced reported its first-quarter net profit of 6.7 billion won ($4.6 million), down 33.1 per cent from a year earlier.
The company said in a regulatory filing that it posted 34.4 billion won in operating profit for the quarter, compared with 49.1 billion won a year ago. Revenue also fell 2.9 percent to 829 billion won.
— IANS
Reader Comments
Despite the net loss, their operating profit actually went up 1.9% and sales jumped almost 17%. That's actually decent when you consider they're dealing with restructuring costs from a recent acquisition. The radar exports to UAE and Saudi Arabia are also a smart diversification move. Indian companies need these long-term strategies too.
It's surprising they spent 140 billion won on a US shipyard without considering weather-related disruptions. Heavy snow affecting a shipyard in Philadelphia sounds predictable. But I suppose that's part of doing business in a new market. Hope they recover quickly - the US Navy contracts would be huge.
'Make American Shipbuilding Great Again' - I wonder what Indian shipbuilders think. We have Cochin Shipyard and others doing well, but could they compete in the US market? The geopolitical angle here is interesting - South Korea positioning itself as a key US ally in defense manufacturing. India should consider similar partnerships.
The equity losses from the Philly shipyard seem significant, but the operating profit improvement shows their core defense business is solid. I'd be cautious about writing them off just yet. The Cheongung-II missile system radar exports to UAE and Saudi Arabia are promising. India's defense exports could take similar path.
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