South Korea’s defense industry is poised for significant growth in 2024, with major defense companies reporting surging profits driven by increasing export volumes and new international contracts, despite falling short of last year’s export target. /Hanwha Aerospace
South Korea’s defense industry is poised for significant growth in 2024, with major defense companies reporting surging profits driven by increasing export volumes and new international contracts, despite falling short of last year’s export target. /Hanwha Aerospace

South Korea’s defense industry exports totaled 13.83 trillion won ($9.5 billion at 1,456 won per dollar) in 2024, reaching only half of the target goal. However, combined operating profits for the country’s major defense companies are expected to rise significantly due to the increasing volume of exports signed over the past two years.

According to financial information provider FnGuide on Jan. 20, the combined annual operating profits of Hanwha Aerospace, Hyundai Rotem, LIG Nex1, and Korea Aerospace Industries (KAI) are projected to reach $1.58 billion. This would mark a 72.3% increase from $922 million in 2023 and the first time exceeding $2 billion.

A K2 Black Panther tank firing during an exercise. /Hyundai Rotem

Among the four S. Korean major companies, Hanwha Aerospace stands out with its robust performance. The company’s estimated revenue for last year is $6.94 billion, and its operating profit is projected to rise 94.65% year-on-year to $924 million. Hanwha Aerospace signed export contracts in 2022 for K9 self-propelled howitzers and Chunmoo multiple rocket launchers (K-239 Chunmoo) with Poland, as well as a K9 deal with Egypt. These contracts have been reflected in its earnings since the second quarter of last year.

Hyundai Rotem, driven by its K2 tanks, is expected to see a revenue increase of 18.43% from the previous year, reaching $2.92 billion. Its operating profit is forecast to surge by 116.66% to $313 million. The company delivered 56 K2GF (gap filler) tanks to Poland under its first contract last year and plans to deliver an additional 96 units this year. Analysts noted that increased exports in the rail sector, which has higher profitability than domestic sales, also contributed to Hyundai Rotem’s rising profits.

South Korea Air Force F-15K and a Philippine Air Force FA-50PH perform a friendship flight over Darwin Air Base in Australia during the exercise Pitch Black on Dec. 31. /KAI

KAI, the manufacturer of the KF-21 Korean Fighter and FA-50 light combat aircraft, is expected to record $2.52 billion in revenue, a 4% decline from the previous year, but an 11.28% increase in operating profit at $189 million.

KAI delivered the domestically developed Light Armed Helicopter (LAH) “Miron” to the S. Korean Army in Dec. 2024,. It is also set to include development earnings from the FA-50PL, a customized variant for Poland, which will begin deliveries at the end of this year. Revenue from the FA-50PL project is recognized gradually as the project progresses. Key development achievements, such as the completion of the air refueling system for the FA-50PL, have been included in the revenue starting from the third quarter of last year.

LIG Nex1, a specialist in guided weapons, is projected to post $2.06 billion in revenue, up 29.93%, and an operating profit of $155 million, up 21% year-on-year. By the end of the third quarter last year, the company’s order backlog stood at $12.63 billion. LIG Nex1 also secured its first export contract for the Cheongung-II surface-to-air guided missile system, agreeing to deliver eight batteries to Iraq. Following pricing negotiations with Hanwha Aerospace, LIG Nex1′s earnings are also expected to grow this year.

A defense industry official said, “As companies increase production of exported defense equipment this year, their earnings are expected to grow even more. New contracts with the Philippines for frigates and ongoing submarine talks with Poland are also likely to strengthen their performance.”