Korea’s major defense companies post strong Q3 earnings

(Hanwha Aerospace)

Major Korean defense companies have continued strong growth in the third quarter of this year, expanding their presence in the global defense scene.

According to Yonhap News on Sunday, an analysis of four defense companies’ regulatory filings and the consensus estimates of securities firms over the past three months showed that the combined operating profit were estimated to reach 753.8 billion won ($546 million) in the third quarter.

The four companies are Hanwha Aerospace Co., Korea Aerospace Industries Ltd. (KAI), Hyundai Rotem Co., and LIG Nex1 Co.

The estimated figure is up 223.1 percent from the third quarter of last year when they posted a combined 233.3 billion won in operating profit.

The combined third-quarter sales are estimated at 5.36 trillion won, up 30.9 percent from 4.1 trillion won last year.

Hanwha Aerospace, the largest of Korea’s major defense firms, reported a third-quarter operating profit of 477.2 billion won, up 457.5 percent on year.

Sales rose 61.9 percent to 2.63 trillion won, largely driven by export performance in Poland.

In July 2022, Hanwha signed a contract with the Polish Armament Agency for 672 K9 howitzers and 288 Chunmoo multi-rocket launchers.

Looking forward, Hanwha’s prospects remain bright with a pending K9 contract for 284 units in Poland and a recent 1.3 trillion won K9 contract with Romania.

As of the third quarter, Hanwha’s order backlog in ground defense alone stood at 29.9 trillion won.

Hyundai Rotem reported sales of 1.09 trillion won in the third quarter, an 18 percent increase from a year ago.

Its operating profit reached 137.5 billion won, up 233.7 percent.

Earlier, the company signed a groundbreaking contract with Poland for around 1,000 K2 tanks, completing the first batch of 180 units and currently negotiating a second batch of 820 units.

Hyundai Rotem’s order backlog stands at about 19 trillion won.

The Korea Aerospace Industries (KAI), which is behind the KF-21 fighter jet and FA-50 light combat aircraft, recorded sales of 907.2 billion won in the third quarter, down 9.9 percent from a year ago.

Its operating profit, however, soared 16.7 percent to 76.3 billion won during the same period.

Key exports include T-50TH jet trainers to Thailand, upcoming FA-50PL deliveries to Poland, initial FA-50M shipments to Malaysia, and support services for Iraq. KAI’s order backlog is solid at 22.4 trillion won.

LIG Nex1 is expected to post sales of 728.3 billion won for the third quarter, up 35.9 percent year-over-year, with an operating profit projected to grow 52.8 percent to 62.8 billion won.

With a robust 19 trillion won order backlog, LIG Nex1 is expected to continue to see growth in sales and profits.

In September, the company secured a 3.7 trillion won contract with Iraq for the Cheongung-II surface-to-air missile system.