The second-quarter operating profit of the automobile thermal management solution corporations Hanon Systems(018880) surpassed 100 billion won, up more than 60% from a year earlier. The company said it was the result of structural improvements such as streamlining operations.
Hanon Systems said on the 31st that on a consolidation financial statements basis, second-quarter operating profit rose 61.2% year over year to 103.7 billion won. Considering that second-quarter sales edged up just 0.6% to 2.8752 trillion won, profitability improved significantly. Net profit also swung to a surplus at 86.1 billion won.
Hanon Systems explained that foreign exchange effects, increased electrification volumes including electric vehicles (EVs) and hybrids from European clients, and operational efficiency gains through global restructuring drove the improvement.
It also helped that the cost of goods sold (COGS) ratio for the first half fell by 2.0 percentage points to 89.3%. A Hanon Systems official said, "As high inflation and high interest rates persisted, we made companywide cost-cutting efforts such as improving efficiency in material and transportation costs," and added, "We will continue to strengthen our fundamentals through ongoing structural improvements and focus on securing mid- to long-term cost competitiveness."
The share of sales from the electrification segment accounted for 31% of total sales as supplies to European clients expanded. The company expects sales to grow this year on increased volumes centered on European premium clients and electrification.
In the first half, 35% of Hanon Systems' sales came from Europe. The largest customer is Hyundai Motor at 48%, followed by Volkswagen Group (12%), Ford (11%), General Motors (6%), BMW (5%), and Mercedes-Benz (4%). Notably, in the second quarter, sales from Mercedes-Benz and BMW rose 36% and 19%, respectively, from a year earlier.
Vice Chairman and CEO Lee Su-il of Hanon Systems said, "Even amid global cost pressures, we laid the groundwork for a recovery in results through companywide operational efficiency and structural improvements," adding, "Going forward, we will bolster our fundamentals to prepare for an uncertain external environment while actively pursuing various new businesses based on automotive thermal management technology to continue sustainable growth."