Big Deal Effect
As all the subsidiaries of Hanwha have evenly put up a good show, the total operating profit of Hanwha Group is expected to surpass 4 trillion won (US$3.54 billion) this year, reaching a record high.
According to industry sources on September 13, the operating profit of Hanwha Group has nearly quadrupled in the past three years. Hanwha Group had sales of 36.92 trillion won (US$32.65 billion) and operating profit of 963.7 billion won (US$852.08 million) in 2014. However, the group posted 52.3 trillion won (US$46.24 billion) in sales and 2.03 trillion won (US$1.8 billion) in operating profit in 2015 and 55.85 trillion won (US$49.38 billion) in sales and 3.62 trillion won (US$3.2 billion) in operating profit last year. Hanwha Group saw its operating profit have doubled every year.
The rapid growth of the group’s sales and profitability was propelled by Hanwha Total and Hanwha Techwin that were acquired from Samsung in 2015. The operating profit of Hanwha Total had doubled from 795 billion won (US$702.92 million) in 2015 to 1.46 trillion won (US$1.29 billion) last year, accounting for about 40 percent of the total operating profit of the group. The company posted 795.6 billion won (US$703.45 million) in operating profit in the first half of this year, up 1.6 percent from the same period a year ago. With massive investment, Hanwha Total is expected to continuously perform well in the petrochemical sector. The operating profit of Hanwha General Chemical and Hanwha Techwin last year totaled 545.9 billion won (US$482.67 million) and 79.2 billion won (US$70.03 million), respectively, nearly doubled from a year earlier.
Hanwha Investment & Securities, a financial subsidiary of Hanwha Group, also recovered from its poor performance and is finally back on track. The company, which made a loss of 11.7 billion won (US$10.34 million) in 2015 and 192.8 billion won (US$170.47 million) in 2016, succeeded in turning a profit in the second quarter this year and made an operating profit of 44.5 billion won (US$39.35 million) in the first half. Hanwha Investment & Securities saw its performance improve as the profit and loss of equity-linked securities (ELS), which had a huge loss, has been stabilized and the company’s performance in the investment banking sector has improved.
Accordingly, Hanwha Group sources inside and outside expect that the combined operating profit of the group will reach a record high of 4 trillion won (US$3.53 billion) when there is no huge change in the second half of the year. In addition, the industry believes that Hanwha Group will continue its upturn in the future because its business efficiency will expand due to the reorganization of the defense sector and the solar power business, which has been promoted as its new future growth engine, has a huge growth potential.