SEOUL, July 10 (AJP) - South Korea’s defense industry continued its unprecedented growth trajectory in the second quarter, buoyed by sustained international demand for weapons systems and armored vehicles.
The nation’s four leading defense contractors — Hanwha Aerospace, Hyundai Rotem, LIG Nex1, and Korea Aerospace Industries (KAI) — are projected to report a combined operating profit exceeding 1 trillion won for the first time, according to financial estimates released this week.
Analysts at FnGuide, a South Korean financial data provider, forecast total revenue of 9.7 trillion won ($7 billion) for the April–June period, with operating profit expected to reach 1.1 trillion won ($800 million).
The performance eclipses the previous record set just a quarter earlier, when the sector posted 8.3 trillion won in revenue and fell just short of the 1 trillion won profit mark.
Hanwha Aerospace led the surge, with second-quarter revenue projected at 6.26 trillion won and operating profit at 696.3 billion won — up 124.8 percent and 94.1 percent, respectively, from a year earlier.
The company benefited from continued deliveries of K9 self-propelled howitzers and Cheonmu multiple launch rocket systems to Poland, as well as exports of propellant materials to the United Kingdom and Sweden. A sharp increase in European ammunition demand, spurred by the protracted conflict in Ukraine, further boosted performance.
Hyundai Rotem also reported robust growth, driven by Poland’s large-scale acquisition of K2 main battle tanks. The company is expected to post 1.38 trillion won in revenue and 232.5 billion won in operating profit, reflecting annual increases of 26.5 percent and 106.1 percent, respectively.
Of the 180 K2 tanks contracted under a 2022 agreement, 133 had been delivered by the end of June, including 49 units shipped this year. The remaining 47 are scheduled for delivery later in 2025.
On July 2, Hyundai Rotem confirmed it had concluded negotiations with Poland’s Ministry of Defense for a second-phase contract valued at $6.5 billion (approximately 8.8 trillion won). The deal was South Korea’s largest-ever single defense export contract.
LIG Nex1, a key player in the guided weapons sector, is expected to post revenue of 883.4 billion won and operating profit of 83.1 billion won, representing year-over-year increases of 46.1 percent and 69 percent.
Much of the growth stems from domestic production of the Cheongung-II (M-SAM) surface-to-air missile system and a significant export deal with the United Arab Emirates. Signed jointly with Hanwha Aerospace in 2022, the $3 billion contract includes a 2.34 trillion won share for LIG Nex1.
Korea Aerospace Industries (KAI) was the lone outlier, with earnings expected to dip slightly in the second quarter. The company is forecast to report 891.4 billion won in revenue and 68.6 billion won in operating profit — down 0.08 percent and 8.77 percent, respectively, from the same period last year.
The decline is attributed to delayed deliveries of FA-50 light combat aircraft to Poland and the absence of large-scale aircraft handovers during the quarter.
However, analysts remain optimistic about a rebound later in the year, as KAI ramps up mass production of its KF-21 next-generation fighter and begins work on a recently awarded order from the Philippines for an additional 12 FA-50 jets.
Copyright ⓒ Aju Press All rights reserved.
View more comments