1. What Happened? Q2 Earnings Analysis

Hanwha Solutions reported Q2 2025 revenue of KRW 31.173 trillion, operating profit of KRW 1.021 trillion, and a net loss of KRW -2.016 trillion. These figures represent a -4% decline in revenue, -27% in operating profit, and a staggering -1042% in net income compared to expectations. The substantial net loss is attributed to a combination of factors, including deteriorating profitability in the basic materials segment and increased financial costs.

2. Why These Results? Root Cause Analysis

The underperformance of the basic materials segment is primarily due to rising international crude oil prices and decreased demand stemming from global recession concerns. Despite benefiting from the US Inflation Reduction Act (IRA), the renewable energy segment faced challenges from intensifying competition in the Chinese market and global oversupply. Additionally, while the rising KRW/USD exchange rate provided some export competitiveness, it also led to increased raw material import costs and foreign exchange losses. Rising interest rates and bond yields further dampened investor sentiment.

3. What’s Next? Future Outlook

In the short term, the recovery of the basic materials segment remains uncertain, and financial burdens from large-scale investment plans persist. However, the long-term growth potential of the renewable energy segment and the company’s foray into the hydrogen energy business offer positive prospects. Continued benefits from the US IRA and the completion and operation of Solar Hub are expected to drive future growth.

4. What Should Investors Do? Action Plan

Investors should be mindful of short-term stock volatility while considering the long-term growth potential of the renewable energy segment. Continuous monitoring of the basic materials segment’s profitability improvement strategies, risk management strategies, and changes in macroeconomic indicators is crucial.