Major domestic defense companies that delivered orders on time and posted solid third-quarter results quickly secured additional volumes, bringing their total backlog to 100 trillion won as of the end of the third quarter. Defense firms are expected to post all-time high results this year, and there is anticipation that their order backlog at year's end will also hit a record.
According to the defense industry on the 9th, Hanwha Aerospace's ground defense backlog stands at 31 trillion won. That is similar to the year-end backlog of 32.4 trillion won. Despite increased deliveries this year, the company secured work by exporting K9 self-propelled howitzers and the Cheongung II ground-to-air guided missile to India and Middle Eastern countries. Considering contracts not disclosed due to the nature of defense materials, some analysts say the actual backlog likely exceeds 31 trillion won.
Hyundai Rotem's order backlog was 2.96088 trillion won as of the end of the third quarter. In Aug., it signed a second execution contract worth 9 trillion won with Poland for K2 tanks, bringing the defense institutional sector backlog to a little over 1 trillion won. Hyundai Rotem plans to further expand overseas exports of the K2 tank.
LIG Nex1 holds an order backlog of 2.34271 trillion won, and Korea Aerospace Industries (KAI) has a backlog of 2.63 trillion won. The backlog for fuselage and wing structures for Boeing and Airbus passenger jets is 990 billion won, and many overseas projects remain, including exports of the FA-50 to the Philippines.
The industry believes domestic defense firms have secured at least five years' worth of work. However, Korea's core defense items are conventional weapons that emphasize cost-effectiveness (performance relative to price), and competition is intensifying as leading defense powers increase investment. Korea offers packages that include ancillary businesses such as maintenance, repair, and overhaul (MRO), operator training, and technology transfer, but there is an assessment that without technology development, the current boom will not be sustainable.
An industry official said, "A company grows by increasing its order backlog, but competition in the global defense market is overheated and tough," and added, "More investment is needed in new weapons systems and technology development to secure competitiveness in defense."