Operating Profits of Four Major Korean Defense Companies Surpass Last Year's Figures in Q1?Q3

Operating Profit of Four Major Defense Firms, Including Hanwha Aerospace and LIG Nex1, Reaches 3.5 Trillion Won
Significantly Surpasses Last Year’s Annual Profit of 2.6 Trillion Won
On Track to Achieve 4 Trillion Won This Year
Order Backlog

Hanwha Aerospace, LIG Nex1, Korea Aerospace Industries (KAI), and Hyundai Rotem-the four major companies in the Korean defense industry-have all reported operating profits for the first to third quarters of this year that have surpassed last year's figures.

According to the defense industry on November 17, the combined cumulative operating profit of the domestic defense industry's "Big Four" reached 3.4928 trillion won for the first three quarters of this year, significantly exceeding last year's annual operating profit of 2.6589 trillion won. As a result, it is expected that these companies' operating profits for this year will surpass 4 trillion won.

Hanwha Aerospace, the leading company in the defense sector, recorded cumulative sales of 18.2816 trillion won and operating profit of 2.2816 trillion won through the third quarter. Last year, it became the first domestic defense company to achieve "10 trillion won in sales and 1 trillion won in operating profit," and this year, it is aiming for "20 trillion won in sales and 2 trillion won in operating profit." In the ground defense sector alone, third-quarter sales reached 2.1098 trillion won and operating profit was 572.6 billion won, up 27% and 30%, respectively, compared to the same period last year. The aerospace division also turned profitable, recording an operating profit of 3.1 billion won.

LIG Nex1 posted cumulative sales of 2.9022 trillion won and operating profit of 280.8 billion won for the first three quarters. This was largely due to mass production and development projects, including the medium-range surface-to-air guided weapon "Cheongung II." Hyundai Rotem recorded sales of 4.2134 trillion won and operating profit of 738.2 billion won for the first to third quarters of this year, thanks to balanced overseas orders in both the railway and defense sectors. KAI, which produces the KF-21 Korean supersonic fighter and the FA-50 multirole fighter, posted sales of 2.2297 trillion won and operating profit of 192.2 billion won during the same period.

These companies have built up a backlog of defense orders close to 100 trillion won, so their performance is expected to remain strong going forward. As of the third quarter, Hanwha Aerospace's defense order backlog stood at 30.9959 trillion won. Its subsidiary, Hanwha Systems, had a defense order backlog of 8.185 trillion won. KAI and LIG Nex1 had order backlogs of 26.27 trillion won and 23.4271 trillion won, respectively, as of the third quarter. KAI signed contracts worth 2.39 trillion won, including the supply of 20 KF-21s to the Defense Acquisition Program Administration, while LIG Nex1 secured contracts for the development of mine-hunting sonar and complex responsive mine countermeasure equipment. In August, Hyundai Rotem signed a second export contract for K2 tanks with the Polish Armaments Agency worth $6.5 billion, bringing its defense order backlog to 10.7897 trillion won.

A company representative predicted, "Given the expansion of export product lineups and diversification of regions, the growth trend in new orders is expected to continue for the next two to three years."