Last year, defense industry exports amounted to $9.5 billion (13.83 trillion won based on 1,456 won), which was only half of the target. However, expectations suggest that the combined operating income of major defense companies will increase significantly, as the volume of export contracts signed over the past two years is steadily rising.
According to the financial information company FnGuide, the projected annual operating income of Hanwha Aerospace, Hyundai Rotem, LIG Nex1, and Korea Aerospace Industries (KAI) last year was estimated at 2.3 trillion won. This marks a 72.3% increase from the combined operating income of 1.335 trillion won in 2023, exceeding 2 trillion won for the first time.
Among the four major defense companies, Hanwha Aerospace's performance stands out. Last year's revenue for Hanwha Aerospace is projected to be 10.1014 trillion won, with operating income expected to rise 94.65% to 1.3453 trillion won compared to the previous year. Hanwha Aerospace signed export contracts for the K9 self-propelled howitzer and the Chunmoo multiple launch rocket system with Poland in 2022 and also concluded an export contract for the K9 with Egypt that same year. This volume has been reflected in its performance since the second quarter of last year.
Hyundai Rotem, which leads with the K2 tank, is expected to see revenue of 4.2484 trillion won, an increase of 18.43% compared to 2023, and operating income projected to rise 116.66% to 455.1 billion won. Last year, Hyundai Rotem delivered 56 units of the K2GF (Gap Filler) from its first contract with Poland. The company plans to supply 96 units to Poland this year, suggesting solid performance again. Moreover, increased exports in the railway sector, where profitability is higher than domestically, is expected to contribute to the rise in operating income.
Korea Aerospace Industries (KAI), which produces the KF-21 fighter jet and the FA-50 multirole fighter, is expected to see revenue of 3.6625 trillion won, a 4% decrease compared to the previous year, while operating income is projected to increase by 11.28% to 275.4 billion won.
In December last year, the domestically developed light armed helicopter Miron was delivered to the Army, and it was reported that the profits related to the development of the FA-50PL (Poland) scheduled for delivery to Poland starting at the end of this year are included. The FA-50PL project, categorized as a development project, measures revenue according to the progress of the project. The aerial refueling system to be installed on the FA-50PL has been completed, so revenue has been accrued since the third quarter of last year.
LIG Nex1, a company specializing in guided weapons, is expected to see an annual revenue increase of 29.93% to 2.9995 trillion won, with operating income projected to rise by 21% to 225.5 billion won. The order backlog for LIG Nex1 reached 18.3904 trillion won as of the end of the third quarter last year. LIG Nex1 secured its first contract to export eight missile defense systems, 'Cheongung-II', to Iraq last year, and once pricing negotiations with Hanwha Aerospace are concluded, the company's performance is expected to continue to rise this year.
A defense industry official noted, "If the companies begin to produce the defense materials they have started to deliver this year, performance will increase compared to last year. Discussions regarding additional contracts for frigates with the Philippines and submarines with Poland are scheduled for this year, so the performance of defense companies is expected to be good as well."