[Edaily Reporter LEE YUNHWA ] Hanon Systems(018880)Hanon Systems boosted its profitability in the third quarter of this year thanks to cost reductions and operational efficiency improvements. Although revenue declined slightly due to production adjustments by automaker customers and exchange rate fluctuations, improvements in the cost structure led to an increase in operating profit.

According to the Financial Supervisory Service’s electronic disclosure system on the 5th, Hanon Systems’ consolidated revenue for the third quarter was 2.6569 trillion won, a 1.8% decrease from the same period last year. In contrast, operating profit rose 26.6% to 120.6 billion won. Compared to the previous quarter, revenue fell 7.6%, but operating profit increased 16.3%. The operating profit margin stood at 4.5%.

Cumulative performance for the year also continued its upward trend. Revenue for the first three quarters totaled 8.2804 trillion won, a 1.2% increase year-over-year, while operating profit rose 77.9% to 321.5 billion won. However, the company posted a net loss of 142.2 billion won in the third quarter, marking a shift to a loss from the net profit of 55.3 billion won recorded in the same period last year. Profit from continuing operations before income tax expenses also turned to a loss, recording a deficit of 155.1 billion won.

This improvement in profitability was driven by effective management of costs and selling, general, and administrative (SG&A) expenses. The cost of sales ratio for the third quarter was 88.5%, down 0.6 percentage points from the previous quarter. The selling, general, and administrative (SG&A) expense ratio also fell from 7.3% to 7.0% over the same period. The cumulative cost of sales ratio for the first three quarters was 89.1%, an improvement of 2.0 percentage points compared to the same period last year. Efforts to reduce cost burdens across production and operations are seen as having contributed to the increase in operating profit.

By business segment, the electrification division showed particularly strong growth. The share of electrification (xEV) in total revenue expanded from 31% in the second quarter to 33% in the third quarter. This was driven by increased supply volumes of electrification products to major customers, reflecting rising demand in the European electric vehicle market. Although total revenue declined due to production disruptions at major domestic customers despite increased sales in the European market, the share of the electrification business actually increased.

Hanon Systems plans to respond to market changes by leveraging its thermal management technology, which covers internal combustion engines, hybrid vehicles, and fully electric vehicles. Rather than focusing on a specific powertrain, the company’s strategy is to supply thermal management solutions for various propulsion systems to meet changing customer demands and secure business competitiveness.

The company is also moving beyond its existing automotive parts business to identify new revenue streams. This year, it launched its aftermarket business in earnest, beginning product sales through domestic T-Station outlets, and secured its first order from Intercar, a European automotive parts distributor. It is also exploring ways to expand the application of its thermal management technology to off-road mobility sectors such as agricultural machinery, construction equipment, and defense.

Outside the automotive industry, the company has begun developing thermal management solutions for energy storage systems (ESS), power conversion systems (PCS), and power semiconductor transformers (SST). It is also pursuing entry into the thermal management market for artificial intelligence (AI) data center servers. The plan is to secure new business opportunities by leveraging the technology and global production and supply chains established through its existing automotive thermal management business.

Lee Soo-il, Vice Chairman and CEO of Hanon Systems, explained, “Despite uncertainties in the global market, process improvements and operational efficiencies are translating into positive business results.” He added, “We will strengthen our foundation for mid- to long-term growth by responding to changes in the electrification market while identifying new business opportunities that leverage our existing thermal management technologies.”