Hanon Systems Q3 operating profit rises 26.6% despite revenue dip

Hanon Systems, a global automotive thermal management supplier and a subsidiary of Hankook & Company Group, announced its financial results for the third quarter of 2026. The company reported consolidated revenue of KRW 2.66 trillion and an operating profit of KRW 120.6 billion.

Revenue declined slightly by 1.8% year-on-year, which the company attributed to temporary volume adjustments by customers and exchange fluctuations. Operating profit, however, increased by 26.6% year-on-year and 16.3% quarter-on-quarter, bringing the operating margin to 4.5%.

For the first nine months of the year, cumulative revenue reached KRW 8.2804 trillion, up 1.2% year-on-year. Cumulative operating profit increased 77.9% to KRW 321.5 billion.

Cost ratios improve

Hanon Systems said its cost competitiveness efforts through operational efficiency are delivering results despite ongoing demand volatility in the global automotive market.

In the third quarter, the cost of goods sold (COGS) ratio improved by 0.6 percentage points, declining from 89.1% to 88.5%. The selling, general, and administrative (SG&A) expense ratio also decreased from 7.3% to 7.0%.

For the first nine months of the year, the cumulative COGS ratio improved by 2.0 percentage points, decreasing from 91.1% to 89.1%.

Europe sales up, volume hit by customer disruption

Although sales in Europe increased, consolidated revenue declined by 1.8% year-on-year, primarily due to lower sales volume resulting from production disruptions at a major domestic customer.

The share of revenue from electrification increased from 31% in the second quarter to 33% in the third quarter. The company said it will continue to strengthen business competitiveness by addressing evolving global market demands and leveraging its portfolio of thermal management solutions.

Aftermarket and off-road expansion

Hanon Systems is pursuing business diversification, leveraging technical expertise and global operational capabilities developed through its core automotive thermal management business.

The company is advancing its aftermarket business, with a full market launch planned by 2026. It has already initiated product sales in the domestic market through “T-Station” and is accelerating the expansion of global sales channels. A key milestone was securing an initial order from Inter Cars, described as a leading automotive parts distributor in Europe.

In addition, the company is exploring opportunities to extend its thermal management technologies into the off-road mobility sector, including agricultural machinery, construction equipment, and defense systems.

New technology portfolio

Beyond its core automotive business, Hanon Systems is expanding its technology portfolio to secure new growth opportunities in other industries.

Building on its thermal management expertise, the company has begun developing solutions for energy storage systems (ESS), power conversion systems (PCS), and solid-state transformers (SST).

At the same time, the company is taking a phased approach to entering the thermal management market for AI data center servers, while identifying business opportunities to establish a foundation for mid- to long-term growth.

CEO comment

Vice Chairman and CEO Soo Il Lee said, "Despite ongoing uncertainties in the global market, our continued focus on fundamental process improvements and operational efficiency has enabled us to maintain stable business performance."

He added, "Going forward, we will continue to respond to changes in the electrification market, identify new growth opportunities that leverage our thermal management expertise, and further strengthen the foundation for sustainable growth."

Quarterly comparison

Company background

Hanon Systems was founded in 1986 and is a global leader in thermal management solutions. In January 2025, it became a subsidiary of Hankook & Company Group. Its offering includes solutions in heating, ventilation and air conditioning, powertrain cooling, compressor, fluid transport, and electronics and fluid pressure. The company operates 50 manufacturing sites and three regional innovation centers and employs more than 20,000 people across 21 countries.