Hanon Systems (Formerly Halla Visteon Climate Control) Business Report FY ended Dec. 2019

Financial Overview (Consolidated)

(in million KRW)

	FY ended Dec. 31, 2019	FY ended Dec. 31, 2018	Rate of change (%)
Sales	7,154,153	5,937,585	20.5
Operating income	483,810	433,776	11.5
Net income	322,613	283,697	13.7

Acquisition

-The Company announced that it'd completed the acquisition of Magna International’s Fluid Pressure and Controls Division. The acquisition cost was USD 1.2 billion. Magna International’s Fluid Pressure and Controls Division supplies core components for hybrid and electric vehicles such as electric cooling fans and electrically-controlled transmission oil pumps. The acquisition this time will allow Hanon Systems to acquire approximately 4,100 workers and nine production and engineering bases in Europe, North America, and Asia. In 2018, Hanon Systems and Magna’s Fluid Pressure and Controls Divisions presumably generated the sales of Korean won (KRW) 7.6 trillion or JPY 744.8 billion in total. (From a press release on March 29, 2019)

Award

-The Company received a “2018 Supplier of the Year” award from a US automaker General Motors Company. The South Korean company won the same award last year. So, this is the second time and for two years consecutive years, or four times in total including the ones it received as its predecessor, Halla Climate Control. The company also announced that its plant in Alabama received a 2018 Supplier Quality Excellence Award from the automaker. (From a press release on May 20, 2019)

R&D Expenditure

(in million KRW)

	FY ended Dec. 31, 2019	FY ended Dec. 31, 2018	FY ended Dec. 31, 2017
Amount	361,285	298,333	256,529
% of sales	5.1%	5.0%	4.6%

R&D Structure

-The Company has a total of 1,600 researchers at its technical research center and electronic component as of December 31, 2019.

Recent Achievements in R&D

Product	Achievements
Electric water pumps	-Has been in mass-production -The company has been acquiring and currently is applying for a number of patents in and outside Korea
Compact carriers	-Has been in mass-production -The company has been acquiring and currently is applying for a number of patents in and outside Korea
Compressors with air foil bearings for FCVs	-Plans to start mass production -The company has been acquiring and currently is applying for a number of patents in and outside Korea
Air-conditioning load reduction system using CO2 sensors	-Air circulation control systems using CO2 sensors -Improved fuel efficiency; and enhanced cooling, heating, dehumidification and ventilation performances -The company has been acquiring and currently is applying for a number of patents in and outside Korea
Compact HVAC	-Has been in mass-production -The company has been acquiring and currently is applying for a number of patents in and outside Korea
Air delivery system for fuel cell vehicle	-Has been in mass-production -The company has been acquiring and currently is applying for a number of patents in and outside Korea
Front end module with pedestrian protection	-Has been in mass-production -The company has been acquiring and currently is applying for a number of patents in and outside Korea
Design of high voltage fan and inverter for fuel cell vehicle	-Has been in mass-production -The company has been acquiring and currently is applying for a number of patents in and outside Korea
Heat pump system for EV	-Has been in mass-production -The company has been acquiring and currently is applying for a number of patents in and outside Korea
Metal seal fitting	-Has been in mass-production -The company has been acquiring and currently is applying for a number of patents in and outside Korea
Magnesium alloy pulley	-Plans to start mass production -The company has been acquiring and currently is applying for a number of patents in and outside Korea
Air mix door for electric vehicles	-Plans to start mass production -The company has been acquiring and currently is applying for a number of patents in and outside Korea
Cold storage evaporator	-Plans to start mass production -The company has been acquiring and currently is applying for a number of patents in and outside Korea
Hybrid heater core	-Has been in mass-production -The company has been acquiring and currently is applying for a number of patents in and outside Korea
Composite air conditioning system	-Has been in mass-production -The company has been acquiring and currently is applying for a number of patents in and outside Korea
3 Zone control HVAC system	-Has been in mass-production -The company has been acquiring and currently is applying for a number of patents in and outside Korea
Deodorizing air conditioning technology using UV LED photocatalyst	-Plans to start mass production -The company has been acquiring and currently is applying for a number of patents in and outside Korea

Investment in Korea

-The Company announced that its Chinese subsidiary, Chongqing Hanon Jianshe Automotive Thermal Systems Co., Ltd., held a ceremony to celebrate the opening of its plant in Chongqing on May 23, 2019. The subsidiary in Chongqing was established in late 2017 as a joint venture between Hanon Systems and China South Industries Group Corporation. Then, the joint venture began constructing the new plant in March 2018. The 38,000-square-meter plant is going to produce compressors and heat pump systems for Changan Automobile and Great Wall Motor. The new plant is expected to have a capacity to produce 1 million compressors a year in 2022. (From a press release on May 23, 2019.)