How Are South Korea's Defence Firms Performing Amid Rising Export Deals?

Seoul, Aug 17 (NationPress) South Korea's prominent defense companies have reported unprecedented earnings during the first half of the year, driven by substantial arms export contracts, according to industry statistics released on Sunday.

The collective operating profits of five top defense firms -- Hanwha Aerospace Co., LIG Nex1 Co., Korea Aerospace Industries (KAI), Hyundai Rotem Co., and Hanwha Systems Co. -- amounted to 2.3 trillion won for the January-June timeframe, marking a remarkable increase of 161.2 percent from 880.7 billion won in the same period last year, as per data from regulatory disclosures and financial statements.

This figure already represents 79.9 percent of their anticipated full-year operating profit of 2.88 trillion won in 2024, as reported by Yonhap news agency.

Their total sales nearly doubled to 19.2 trillion won, up from 9.9 trillion won a year prior.

Industry leader Hanwha Aerospace achieved a record 1.43 trillion won in operating profit for the first half, which is a fourfold increase from 355 billion won, while its sales surged more than three times to 11.8 trillion won.

LIG Nex1 experienced a 64.6 percent year-on-year increase in operating profit, reaching 191.2 billion won for the six-month duration, with sales rising 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 declined 6.4 percent to 1.5 trillion won.

Hyundai Rotem saw its operating profit soar by 192.4 percent year-on-year to 460.4 billion won, with sales climbing by 40 percent to 2.6 trillion won.

Conversely, Hanwha Systems reported a 29.5 percent decline in operating profit to 91.6 billion won, despite an 18.4 percent rise in sales to 1.5 trillion won.

Industry experts attribute these strong first-half results to heightened overseas demand amid increasing geopolitical risks in the Middle East and Europe.

Hanwha Aerospace witnessed a 43 percent rise in overseas sales during the second quarter compared to the previous year, driven by increased exports of defense systems like the Chunmoo multiple rocket launcher.

Hanwha Systems reported a 11.8 percent increase in second-quarter sales, propelled by the delivery of multi-function radars (MFR) used in the Cheongung-II medium-range surface-to-air missile system to nations such as the United Arab Emirates and Saudi Arabia.

KAI recorded 227.3 billion won in overseas sales for the second quarter, attributable to exports of FA-50 fighter jets to Poland and Malaysia.

With a cumulative order backlog of 111.9 trillion won, market analysts anticipate that the growth momentum among defense firms will persist into the second half.

"With ongoing overseas orders for flagship products along with timely deliveries, we maintain a positive outlook for the second half of the year and beyond," stated an industry official under the condition of anonymity.