The cumulative exports of the four domestic defense companies (Hanwha Aerospace, Hyundai Rotem, Korea Aerospace Industries (KAI), LIG Nex1) for the first to third quarters of this year have exceeded 27 trillion won. If this breaks through 30 trillion won, it will jump to about three times last year's level. With order backlogs already reaching 100 trillion won and the export outlook positive, President Lee Jae-myung and the heads of major defense corporations are visiting the Middle East for "defense sales," raising industry expectations.
According to each company's quarterly report on the 17th, the four defense companies' exports for the first to third quarters of this year totaled 27.2179 trillion won. Compared with last year's annual exports by these corporations (10.5342 trillion won), that is about 2.6 times larger. In particular, they recorded a total of 16.5268 trillion won in exports in the third quarter alone, surpassing the export performance accumulated over the preceding half year (10.5911 trillion won) in a single quarter. An industry official said, "At this rate, 30 trillion won will be a breeze to surpass."
Breaking down the first to third quarter exports of the four defense companies by corporation, Hanwha Aerospace accounted for most with 20.2025 trillion won. As recently as last year, Hanwha Aerospace's annual exports were 5.7848 trillion won, about 35.5% of total sales, but this ratio has now expanded to 67%. Deliveries to Poland this year of 56 K9 self-propelled howitzers and 60 Chunmoo multiple rocket launchers were significant.
Hyundai Rotem exported 4.1951 trillion won worth, 1.6 times last year's 2.5135 trillion won. Hyundai Rotem won an order in 2022 for 180 K2 tanks from Poland, delivered 98 to Poland from 2022 to last year, and delivered 82 this year. As revenue is recognized upon completion of each delivery, exports rose sharply. On the back of this, Hyundai Rotem also broke its all-time quarterly operating profit record throughout the first to third quarters this year.
Even KAI, whose third-quarter results deteriorated, surpassed last year's level in exports with 1.2037 trillion won in the third quarter and a cumulative 2.0115 trillion won, compared with 1.4621 trillion won a year earlier. A KAI official explained, "We signed contracts (in 2022–2023) to sell 48 and 18 FA-50 supersonic light combat aircraft to Poland and Malaysia, respectively, and exports increased as about 50 of these were recognized as revenue according to project progress." LIG Nex1 also improved, with cumulative exports of 808.8 billion won versus last year's 773.8 billion won.
Exports by the four defense companies are expected to stay on a solid path for the time being. Their order backlogs reached 100 trillion won as of the end of the third quarter. Hanwha Aerospace has secured 30.9959 trillion won in orders, including a 371.4 billion won K9 self-propelled howitzer contract with India this year. In the first half of next year, it also has Romania's armored vehicle program and the U.S. self-propelled howitzer modernization program scheduled. KAI, LIG Nex1, and Hyundai Rotem also hold order backlogs of 26.27 trillion won, 23.4271 trillion won, and 10.7897 trillion won, respectively.
Another factor fueling industry expectations is that President Lee Jae-myung; Kim Dong-Kwan, vice chairman of Hanwha Group; Chung Eui-sun, chairman of Hyundai Motor Group; and other defense-related heads are launching "defense sales" in the United Arab Emirates (UAE) starting today. The UAE is one of the top 15 countries in global defense expenditure and last year spent 5.2% of its gross domestic product (GDP) on defense. It had imported weapons from the United States, France, and the United Kingdom in the past, but recently has been diversifying its supply chain with a focus on Asian countries.
The UAE was the first in the Middle East to adopt Cheongung II, a domestically produced medium-range surface-to-air missile, and is also said to be interested in Korean-made supersonic fighter KF-21 and K2 tanks. It is also reportedly weighing Korea, France, and Türkiye for procurement of "drone wingmen," autonomous unmanned aircraft that support manned fighter missions. At the Dubai Airshow, the Middle East's largest aviation industry exhibition opening today, political and business leaders are also expected to actively pitch sales.
An industry official said, "The Middle East, including the UAE, introduces products regardless of nationality, so competition is extremely fierce and the market is large, making it important for Korea as a latecomer," adding, "Unlike the United States and Europe, where technology restrictions are strict, Middle Eastern countries have recently been paying more attention to Korea, which has left open the possibility of certain levels of technology cooperation. If the government actively steps up at this stage, it could create a favorable environment (all the way to orders)."