Hanon Systems Corp. (Formerly Halla Visteon Climate Control) Business Report FY ended Dec. 2016

Financial Overview (Consolidated)

(in million KRW)
FY ended Dec. 31, 2016 FY ended Dec. 31, 2015 Rate of
change (%)
Sales 5,703,714 5,558,080 2.6
Operating income 422,548 359,550 17.5
Net income 303,755 243,370 24.8

Recent Development Outside Korea


-The Company announced that it will expand its rotary suction compressor capacity in Chennai, India. It is aiming to increase its annual production capacity for the product to 2 million units by 2020. The Company has three other plants in India: Bhiwadi, Sanand, and Pune. (From a press release on October 4, 2016)


-The Company announced that it will establish a plant in Ohio, U.S.A. The facility will be constructed on an 8,825-square-meter plot in Carey, Wyandot County in northwest Ohio. It includes room for expansion based on business needs. The plant will produce heating, ventilation, and air conditioning (HVAC) systems, starting in the middle of 2017. It will serve as the Company's 40th manufacturing facility in the world. (From a press release on January 7, 2016)

R&D Expenditure

(in million KRW)
FY ended Dec. 31, 2016
(Consolidated)
FY ended Dec. 31, 2015
(Consolidated)
FY ended Dec. 31, 2014
(Consolidated)
Amount 234,186 220,960 216,573
% of sales 4.1% 4.0% 3.9%

R&D Structure

-On December 13, 2016, the Company opened a new engineering center in Songjiang District, Shanghai, China. The new 3,612-square-meter-facility will serve as the engineering center for application engineering and system evaluation to support Chinese automakers and global vehicle manufacturers operating in China. The Shanghai center is one of 14 engineering locations supported by the Company's four global technical centers that are located Daejeon, Korea; Kerpen, Germany; Novy Jicin, Czech Republic; and Van Buren Township, U.S. These centers are responsible for developing advanced technologies and core products as well as for standardizing new technologies for the global market. (From news releases issued by multiple sources on December 14, 2016)

-The Company announced that it has completed a new wind tunnel test facility at its R&D center in Daejeon, Korea. The facility will test automotive climate control products such as air conditioning systems, heaters, and engine cooling systems, and will assess how extremely cold and hot weather affects vehicle performance and durability. In June 2016, the Company held a groundbreaking ceremony for an electromagnetic compatibility (EMC) laboratory and an additional anechoic chamber. The EMC laboratory is expected to be completed and inaugurated at the end of 2016, while the new anechoic chamber is scheduled to be completed and begin operating in the first half of 2017. (From a press release on June 22, 2016)

-The Company opened a technical center in Daejeon in 1989.

-The Company has R&D facilities in the following location:

  • Korea: 1 facility
  • Europe: 2 facilities
  • Americas: 1 facility

R&D Activities

-The Company announced that its centrifugal air compressor and UV LED photocatalyst have been named Automotive News' 2016 PACE Award Finalists. The centrifugal air compressor supplies compressed air to the fuel-cell stacks of fuel-cell vehicles. The compressor has already been chosen for Hyundai Motor's hydrogen powered vehicles. The UV LED photocatalyst is an air purification technology that removes microorganisms and harmful substances from heating, ventilation, and air-conditioning (HVAC) systems. (From a press release on November 3, 2015)

-The Company and Hyundai Motor have jointly developed a smart climate control system for electric vehicles (EVs). The system can automatically control the inflow of air from outside the vehicle depending on the levels of humidity in the cabin, the temperature inside and outside of the vehicle, and the vehicle's driving speed. This technology can minimize the energy consumption of the vehicle when the air conditioning system is operating. The new climate control system is already used on the Kia Soul EV and is expected to be featured also on hybrid models. (From a press release on November 3, 2015)

-The Company began mass-producing its high-efficiency heat-pump systems for electric vehicles during 2014. Revenues from the sale of these pump systems reached KRW 4.6 billion in the same year. The advanced pump system, which was developed jointly with Hyundai Motor, can extend the range of an electric vehicle with the heater on by over 20 percent. It also reduces energy consumption by 30 to 60 percent. Halla Visteon Climate Control expects that annual revenues from the sales of the heat pump systems will climb to KRW 37 billion by 2017. (From a press release on April 14, 2015)

-The Company will debut its integrated climate control technology called HV iCool at the Seoul Motor Show that will be held from April 3 through April 12, 2015. HV iCool combines the heating, ventilation and air conditioning (HVAC) system, a compressor, and a condenser into a single unit. This integrated unit is 20 to 30 percent lighter than existing solutions, and improves driving range of electric vehicles by over 30 percent. (From a press release on April 3, 2015)

-The Company has developed a new heat pump system for electric vehicles. Unlike a conventional electric heater, which only uses power supplied from the battery to heat the cabin, heat pumps draw heat from external air, thereby reducing power consumption. HVCC's new heat pump system also utilizes the waste heat recycled from the vehicle's motor and inverter as an additional heat source, further extending the vehicle's drive range by decreasing the power drain on the battery. With this innovation, waste heat is harvested by the heat pump to support the vehicle's heating system and meet the desired cabin temperature, even in challenging sub-zero temperatures. This function helps dramatically reduce the vehicle's energy consumption and increases the driving range on a single battery charge by more than 20 percent. HVCC's heat pump system is in production on several vehicles sold globally and will be showcased at the Seoul Motor Show in April 2015. (From a press release on March 9, 2015)

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

Capital Investments in FY ended Dec. 31, 2016

Division Type of investment Purpose of the investment Invested amount
(in billion KRW)
Project period
Automotive air conditioning systems Additional facility -Expanding production capacity 213.4 Jan. 2016 -
Dec. 2016
New facility with automated lines -Producing products for new car models
-Cutting costs
-Improving productivity
113.9 Jan. 2016 -
Dec. 2016
Total 327.3 -

Capital Investments for FY ending Dec. 31, 2017 and After

Division Type of investment Purpose of the investment Amount of investment
(in billion KRW)
FY2017 FY2018 FY2019
Automotive air conditioning systems Additional facility -Expanding production capacity 562.7 187.6 187.6 187.5
New facility with automated lines -Producing products for new car models
-Cutting costs
-Improving productivity
300.5 100.2 100.2 100.1
Total 863.2 287.7 287.7 287.6