How Did Defence Firms Achieve Record H1 Earnings Through Major Export Deals in S. Korea?
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Synopsis
South Korea's defense industry is booming, with major firms reporting unprecedented earnings in the first half of the year. This surge is propelled by significant arms export agreements amidst global geopolitical tensions, promising a continued upward trajectory for these companies. Discover how these developments could reshape the defense landscape.
Key Takeaways
- South Korean defense firms achieved a combined operating profit of 2.3 trillion won in H1 2024.
- Hanwha Aerospace saw profits quadruple, reaching 1.43 trillion won.
- The overall sales for these firms nearly doubled to 19.2 trillion won.
- Strong overseas demand is attributed to geopolitical risks.
- Market analysts predict ongoing growth due to a significant order backlog.
Seoul, Aug 17 (NationPress) South Korea's prominent defense companies have announced unprecedented earnings for the first half of this year, driven by substantial arms export agreements, as revealed by industry data on Sunday.
The total operating profits of five major defense firms—Hanwha Aerospace Co., LIG Nex1 Co., Korea Aerospace Industries (KAI), Hyundai Rotem Co., and Hanwha Systems Co.—reached 2.3 trillion won during the January-June timeframe, marking a 161.2 percent increase from 880.7 billion won the previous year, based on regulatory filings and financial reports.
This amount already accounts for 79.9 percent of their projected annual operating profit of 2.88 trillion won for 2024, reported Yonhap news agency.
Their combined revenue nearly doubled to 19.2 trillion won, up from 9.9 trillion won a year earlier.
Industry leader Hanwha Aerospace reported an astonishing 1.43 trillion-won operating profit for the first half, a fourfold increase from 355 billion won, while its sales soared more than three times to 11.8 trillion won.
LIG Nex1 experienced a remarkable 64.6 percent year-on-year rise in operating profit, totaling 191.2 billion won for the six-month duration, with sales increasing by 35.4 percent to 1.9 trillion won.
KAI recorded an operating profit of 132 billion won, a 7.9 percent increase, although its sales dipped 6.4 percent to 1.5 trillion won.
Hyundai Rotem's operating profit surged by 192.4 percent year-on-year to 460.4 billion won, with sales rising 40 percent to 2.6 trillion won.
Conversely, Hanwha Systems noted a 29.5 percent decline in operating profit to 91.6 billion won, despite an 18.4 percent growth in sales to 1.5 trillion won.
Industry experts credit the strong first-half performance to heightened global demand amid increasing geopolitical tensions in the Middle East and Europe.
Hanwha Aerospace's second-quarter international sales surged by 43 percent year-over-year, fueled by increased exports of defense systems like the Chunmoo multiple rocket launcher.
Hanwha Systems' second-quarter sales grew by 11.8 percent, supported by shipments of multi-function radars (MFR) utilized in the Cheongung-II medium-range surface-to-air missile system to the UAE and Saudi Arabia.
KAI achieved 227.3 billion won in international sales during the second quarter, primarily due to FA-50 fighter jet exports to Poland and Malaysia.
With a total order backlog of 111.9 trillion won, market analysts anticipate ongoing growth for the defense companies in the latter half of the year.
"With persistent international orders for our flagship products and timely deliveries, we maintain a positive outlook for the second half of the year and beyond," stated an industry representative who wished to remain anonymous.
Point of View
I observe the significant rise in South Korea's defense earnings as a reflection of the current geopolitical climate. The robust performance of these firms not only highlights their competitiveness on the global stage but also raises questions about the implications of increased military exports. The nation stands to benefit economically while navigating the complexities of international relations.
NationPress
09/10/2025
Frequently Asked Questions
What drove the record earnings of South Korean defense firms?
The record earnings were largely driven by substantial arms export deals amidst rising geopolitical tensions.
Which South Korean defense firms reported strong H1 earnings?
The firms include Hanwha Aerospace, LIG Nex1, Korea Aerospace Industries, Hyundai Rotem, and Hanwha Systems.
What was the overall increase in operating profits for these firms?
The combined operating profits rose 161.2 percent to 2.3 trillion won.
How much did Hanwha Aerospace earn in operating profit?
Hanwha Aerospace reported a record operating profit of 1.43 trillion won.
What is the outlook for these firms in the second half of the year?
Experts expect continued growth due to a substantial order backlog and ongoing international demand.
