Operating profit for the third quarter of this year at Korea's four major defense companies is expected to top 1 trillion won. The first time the four posted more than 1 trillion won in quarterly operating profit was in the second quarter of this year. As exports of booked orders proceed stably, there are also expectations that, for the first time ever, their combined annual operating profit will exceed 4 trillion won.
According to the defense industry on the 3rd, Hanwha Aerospace and Hyundai Rotem# will release their third-quarter results that day. LIG Nex1 and Korea Aerospace Industries (KAI) are also scheduled to release results in early this month. The four companies posted a combined 1.2848 trillion won in operating profit in the second quarter. The first-half cumulative total was 2.2088 trillion won, a sharp increase from 750.8 billion won in the first half of last year.
According to FnGuide, the combined third-quarter operating profit forecast for the four defense companies this year is 1.3006 trillion won. That is up 72.5% from the combined operating profit of 753.8 billion won in the third quarter of last year. Compared with 2023 (233.3 billion won), it increased fivefold. The combined third-quarter revenue forecast for the four defense companies is 10.0503 trillion won. A source in the industry said, "Beyond the K9 self-propelled howitzer and K2 tank, more weapons are being exported, and with stable deliveries, the results are being reflected."
Hanwha Aerospace is expected to post 881.6 billion won in operating profit in the third quarter. That is similar to the second quarter, with steady deliveries of Cheongung II launchers and multi-function radars (MFR) exported to the United Arab Emirates and Saudi Arabia. Hanwha Aerospace's results also include those of affiliates Hanwha Systems and Hanwha Ocean, and Hanwha Ocean's third-quarter operating profit rose sharply year over year.
Hanwha Aerospace's results are expected to improve further in the fourth quarter. Parts contracts signed with LIG Nex1 in connection with Cheongung II exports to Iraq could start to be reflected from the fourth quarter. At Iraq's request, delivery times and quantities are undisclosed, but since the export contract was signed last year, deliveries are expected to begin next year. The scale of Cheongung II exports to Iraq is 3.7 trillion won, and defense affiliates of Hanwha Group previously signed parts contracts worth 1.477 trillion won with LIG Nex1.
Hyundai Rotem is expected to record 265.6 billion won in operating profit in the third quarter this year, backed by stable deliveries of K2 tanks to Poland. That is a 93.2% increase from the third quarter of last year. Hyundai Rotem plans to deliver 180 K2 tanks to Poland by this year, and there have been no reported delays.
LIG Nex1 is expected to post 77.4 billion won in operating profit in the third quarter this year, up 48.9% year over year. LIG Nex1 is responsible for system integration of the Cheongung II adopted by the United Arab Emirates and Saudi Arabia. KAI is projected to post 76 billion won in operating profit, down 0.3% year over year.
An industry source said, "There are volumes like the FA-50 light combat aircraft that still await intergovernmental agreements and have yet to be delivered," and added, "If these issues are resolved, the performance of defense companies will improve further."