Hanwha Group's shipbuilding and defense subsidiaries maintained strong performance in the third quarter. In particular, Hanwha Ocean has found a path to resolve long-standing labor disputes, which is expected to boost future profitability. However, securing profitability for Hanwha Systems' future projects remains a challenge.
According to industry reports on October 27, Hanwha Ocean recorded third-quarter sales of 3.4139 trillion won and an operating profit of 485.7 billion won, marking increases of 13% and 68%, respectively, compared to the same period last year. Cumulative operating profit for the third quarter reached 1.6629 trillion won, an 81% increase.
The strong performance was supported by sales from high-value vessels such as liquefied natural gas (LNG) carriers and stable progress in submarine and surface ship projects. As of the end of September, the total order amount reached $7.72 billion.
Additionally, the resolution of prolonged labor disputes has heightened expectations for improved profitability. Hanwha Ocean's labor union reached a tentative agreement on wage and collective bargaining terms, which includes a basic salary increase of 140,000 won and a one-time payment of 8.5 million won. A vote on the agreement will take place at a union general meeting on October 29. If finalized, the resolution of uncertainties in production will likely lead to stable operations and continued growth in performance.
The defense sector is also experiencing ongoing growth. Hanwha Systems announced third-quarter sales of 831.6 billion won and an operating profit of 99.2 billion won, with operating profit surging 60.5% and sales increasing by 30% compared to the previous year.
The strong results are attributed to the multi-functional radar (MFR) for the Cheongung II system, with significant contracts in the Middle East progressing. Contracts secured in the UAE, Saudi Arabia, and Iraq amount to approximately 3.35 trillion won. As of the end of the third quarter, the defense sector's order backlog stood at 8.3956 trillion won.
However, there are negative factors that could impact long-term growth. Hanwha Systems faces the challenge of developing new revenue sources through projects in satellite communications and defense artificial intelligence (AI). Efforts to secure investment resources are underway, including the planned sale of 60% of the shares in the Philippine shipyard held by its U.S. subsidiary, HS USA Holdings, to a U.S. affiliate of Hanwha Group. When combined with funds secured from the liquidity of Hanwha Ocean's shares, recent funding efforts exceed approximately 3.4 trillion won.
With the secured investment resources, Hanwha Systems is expected to accelerate the development of future projects in satellite communications and defense AI. Maintaining a stable revenue base from existing defense operations while transitioning new projects into viable revenue sources will be crucial for future growth.
* This article has been translated by AI.
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