Hanwha Solutions, SKC post weak Q3 earnings on sluggish business environment

[Courtesy of Hanwha Q Cells]

South Korea’s Hanwha Solutions Corp. and SKC Co. saw their third-quarter earnings decline sharply from a year ago amid the challenging business environment.

In a disclosure on Tuesday, Hanwha Solutions, an energy unit of Hanwha Group, announced that its operating profit reached 98.3 billion won ($72.4 million) in the third quarter, down 70.8 percent from the same period a year ago, on sales of 2.93 trillion won, down 9.7 percent.

The results included a tax deduction of 35 billion won under the U.S. Inflation Reduction Act (IRA), which is provided for the production of solar cells and modules.

Excluding the additional income from the IRA, Hanwha Solutions’ operating profit is estimated at 63.3 billion won.

Hanwha Solutions’ renewable energy division led by Hanwha Q Cells Co. raised 1.28 trillion won in sales in the July-September period, down 3.9 percent from the same period a year ago. Operating profit stood at 34.7 billion won, down 82.4 percent during the same period.

Hanwha Solutions blamed the sharp decline to a fall in selling prices, leading to a deterioration in profit margins, along with reduced sales volumes due to slow demand in Europe.

“In the fourth quarter, we will add 1 trillion won in sales by selling the power generation segment of our solar engineering, procurement, and construction (EPC) business,” said an official from the company.

“With the sale, our operating margin will be in the mid-to-upper single digits.”

The market outlook for power generation business, however, remains dim.

In the renewable energy sector, module sales are expected to increase, but in the chemicals sector, operating profit is expected to fall further due to the impact of regular maintenance.

In the advanced materials sector, operating profit is projected to fall due to the increase in the price of key raw materials.

SKC, a materials unit of SK Group, also posted weak third-quarter earnings, remaining in the red for the fourth straight quarter.

SKC’s secondary battery business, which encompasses SK nexilis Co., posted 176.1 billion won in sales and an operating loss of 13 billion won.

The copper foil business for batteries, led by SK nexilis, faced a downturn in performance in the third quarter due to a significant influx of China-made batteries in Europe, which led to a deterioration in the performance of domestic battery companies.

Additionally, the impact of rising electricity rates further affected performance.

The company’s semiconductor business reported 62 billion won in sales and 3.5 billion won in operating profit, down from 7.1 billion won in the same period last year.

SKC’s chemicals business posted 304 billion won in sales. It logged an operating loss of 8.9 billion won due to the prolonged downturn in the market.

“The front industries are expected to see a slowdown in demand in the fourth quarter,” said an SKC official. “We plan to reevaluate the timing of investments in North American copper foil and eco-friendly materials sectors.”