Hanwha Systems Hindered by Philly Shipyard Losses Despite Cheongung-II Export Gains

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\r\n[The Financial News] Hanwha Systems continued to post double-digit sales growth in the first quarter of this year, supported by strong defense exports, but losses at its Philly Shipyard in the United States still weighed on earnings.
Hanwha Systems announced on the 27th that, on a consolidated basis, it recorded sales of 807.1 billion won and operating profit of 34.3 billion won in the first quarter. Sales rose 17% from a year earlier, while operating profit increased 2% from 33.6 billion won.
Net profit swung to a loss of 95.8 billion won. The result reflected a larger operating loss at Philly Shipyard in Philadelphia, which Hanwha Systems and Hanwha Ocean jointly acquired in December 2024. The shipyard posted an annual operating loss of 160 billion won last year and remained in the red in the first quarter of this year as well.
A Hanwha Systems official explained, "A historic blizzard that hit the northeastern United States in January and February this year temporarily increased the burden on Philly Shipyard." In fact, record snowfall of up to 60 to 71 centimeters hit the northeastern U.S. in January and February, severely disrupting industrial activity across the East Coast, including Philadelphia.
By business segment, the defense unit led sales growth. Exports to the Middle East were the key driver. Revenue from the Cheongung-II multifunction radar (MFR) exported to the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia was reflected in earnest. In March, Cheongung-II successfully intercepted a ballistic missile launched from Iran in a real combat situation in the UAE, cementing its status as a flagship export weapon of Korea's defense industry as additional purchase requests have followed in the region.
Domestic mass-production projects also contributed to results, including the AESA radar and avionics systems for the KAI KF-21 Boramae fighter jet. On the 20th, Hanwha Systems signed a first mass-production contract worth about 92 billion won with Korea Aerospace Industries, Ltd. (KAI) for the Electro-Optical Targeting Pod (EO-TGP) for the KAI KF-21 Boramae, further expanding domestic defense production volumes.
The ICT division maintained stable sales, mainly through projects involving affiliates such as Hanwha Aerospace Co., Ltd. and Philly Shipyard.
A Hanwha Systems official said, "We plan to sustain stable sales growth by maintaining defense export momentum and expanding domestic mass-production projects." The official added, "Philly Shipyard's losses are expected to narrow significantly from a year earlier as it delivers ships already on order."
The securities industry also expects Philly Shipyard's operating loss to shrink to around 17.5 billion won this year. Expectations are growing for a turnaround in the second half of the year. 
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ggg@fnnews.com Kang Gu-gwi Reporter