Korea’s Poongsan set to post record 2023 earnings on robust defense exports

Poongsan Corp. logo [Courtesy of Poongsan]

Poongsan Corp., the only manufacturer of ammunition and artillery shells in South Korea, is projected to post record defense earnings this year as demand for conventional weapons grows following the Russia-Ukraine war.

According to a regulatory filing on Monday, Poongsan raised 59 billion won ($44 million) in operating profit in the first quarter, up 19.5 percent from the same period a year ago, on sales of 771.1 billion won, up 0.4 percent.

The brokerage industry expects that Poongsan will achieve record defense earnings this year.

“Poongsan is projected to post record defense sales this year as its export market expands to Europe in addition to the U.S. and Middle East,” said Lee Jong-hyung, an analyst at Kiwoom Securities Co.

“Profitability of its overseas defense business is significantly higher than that of its domestic business, which is expected to improve its profit structure.”

Poongsan is making up for the shortage of ammunition and shells created by the massive supply of the weapons to Ukraine by the U.S. and European Union.

Ukrainian forces are reportedly firing 6,000 to 8,000 shells a day in its war with Russia, a figure that is significantly high given that the U.S. produces 14,000 rounds of ammunition a month.

The U.S. is asking its allies including Korea for support.

According to Representative Shin Won-sik of the ruling People Power Party, Poongsan exported 100,000 rounds of ammunition last year on condition that they are used only by the U.S.

Korea’s Defense Acquisition Program Administration has also recently signed a contract to lend 500,000 shells to the U.S., prompting expectations that Poongsan will benefit from the contract.