Hanwha Aerospace Profit Sinks on Delayed K9 Deliveries to Poland

Hanwha Aerospace's operating profit for the third quarter of the year saw a significant decline of over 46%, falling more than 60% below market expectations. This downturn was attributed to delayed deliveries of key export items, including the Poland K9 self-propelled howitzers, a weaker dollar-won exchange rate, and a recent fire incident at their Daejeon plant.

Despite these challenges, the company stated that the decline is temporary and linked to adjustments in delivery schedules rather than production issues. Hanwha Aerospace predicts a recovery in earnings for the fourth quarter as delayed exports to Poland commence and projects in Egypt and Australia advance. In the third quarter, the company reported an operating profit of 452 billion won, a stark 46.2% decrease from the previous year, while sales fell by 6.0% to 6.0943 trillion won.

Cumulatively, from quarters one to three, the operating profit reached 2.4564 trillion won, up 10.1% compared to the same period last year, with sales increasing by 15.6% to 21.1382 trillion won. The land defense systems division's performance was particularly weak, with sales down 41% and operating profit falling 96% year-over-year.

The company attributed part of the decline to one-off costs from the Daejeon plant fire and the negative impact of a weaker dollar-won exchange rate. Looking ahead, Hanwha Aerospace anticipates earnings improvement by fourth quarter, driven by the timely delivery of Poland K9 units and increased production of the Chunmoo launchers, with over 30 and 60 units respectively expected this year.

The company plans to restart the Daejeon plant in the first half of the next year and has secured new export contracts in Spain, the U.S., and Croatia, indicating ongoing demand for their products.