Hanwha Systems Posts Q1 Net Loss on U.S. Shipyard Investment Losses

SEOUL, April 27 (Yonhap) -- Hanwha Systems Co., the defense solutions arm of Hanwha Group, said Monday it swung to a net loss in the first quarter from a year earlier, citing substantial equity losses tied to its U.S. shipyard investment. For the three months ended March, the company reported a net loss of 95.75 billion won (US$65 million), compared with a net profit of 24.36 billion won a year earlier. The decline was largely attributed to increased equity losses from Hanwha Philly Shipyard in Philadelphia, which were exacerbated by heavy snowfall in the northeastern United States during January and February, a company official said. Hanwha Systems holds a 60 percent stake in the U.S. shipyard, while the remaining 40 percent is owned by affiliate Hanwha Ocean Co. Hanwha Group acquired the shipyard for 140 billion won in 2024 as part of a strategy to expand into the U.S. shipbuilding market, with the long-term goal of securing contracts from the U.S. Navy. It marked the first acquisition of a U.S. shipyard by a South Korean shipbuilder and is considered a key asset in a Seoul-backed initiative dubbed "Make American Shipbuilding Great Again" (MASGA). Acquisition-related costs have continued to weigh on earnings. Despite the net loss, operating profit rose 1.9 percent to 34.28 billion won in the first quarter from 33.63 billion won a year earlier, while sales increased 16.9 percent to 807.09 billion won from 690.1 billion won. The company said revenue growth was driven by exports of multifunction radars for the Cheongung-II missile system to the United Arab Emirates and Saudi Arabia. Looking ahead, the company expects losses at the Philadelphia shipyard to narrow significantly this year, supported by planned vessel deliveries, the official said.