Poland Export Boom Drives Defense Industry's Top 4 Companies to Surpass 20% Overseas Sales in First Half of Year

Hanwha, Korea Aerospace Industries (KAI), LIG Nex1, Hyundai Rotem
Overseas Sales Surpass 20% for the First Time in 4 Years... Earn 8.3 Trillion Won
Defense SMEs Remain Stagnant... Gap Between Large and Small-Medium Enterprises Expected to Widen

[Asia Economy Yang Nak-gyu, Military Specialist Reporter] The overseas sales ratio of the four major domestic defense companies?Hanwha Aerospace, Korea Aerospace Industries (KAI), LIG Nex1, and Hyundai Rotem?exceeded 20% in the first half of this year for the first time in four years. The growth in exports of domestically produced weapons, including the signing of a weapons export contract with Poland, has significantly expanded their overseas business.

According to industry sources on the 30th, the overseas sales ratio of these major defense companies accounted for 21.4% of the entire defense industry in the first half of this year. In terms of amount, it exceeded $7 billion (approximately 8.3 trillion KRW). Their overseas sales recorded 23.58% in 2018, then dropped to 19% in the first half of 2019, 19.65% in 2020, and further down to 9.23% last year. However, in March this year, Hanwha Co., Ltd. signed a defense export contract worth 980 billion KRW with the Saudi Arabian Ministry of Defense, and this month, KAI, Hyundai Rotem, and Hanwha Defense signed export contracts worth around 25 trillion KRW with the Polish Ministry of Defense.

Unlike the thriving large corporations, small and medium-sized defense companies are stagnating. According to the Korea Institute for Industrial Economics and Trade, last year, small and medium-sized enterprises accounted for 29.1% of domestic defense companies' sales and only 12.8% of their export volume. Although the export tally for the first half of this year is not yet complete, there is growing consensus that even if exports increase, the impact on small and medium-sized enterprises will not be as significant as on large corporations. Consequently, despite the domestic weapons export scale exceeding $15 billion for the first time this year, there are concerns that the gap between large corporations and small and medium-sized enterprises will widen further.

Meanwhile, with defense industry company STX Engine coming up for sale, the possibility of mergers and alliances among domestic defense companies is also being raised. The largest shareholder, United Asset Management, is considering the sale, buoyed by the strong stock price of STX Engine.

This content was produced with the assistance of AI translation services.