[Alpha Biz= Kim Jisun] South Korea’s defense sector is on track to surpass KRW 4 trillion in annual operating profit for the first time in history, reflecting strong export momentum and growing global defense demand following the Russia-Ukraine war. Analysts view this growth as a sign of the industry’s long-term strategic trajectory, rather than just short-term performance gains.



According to financial data provider FnGuide on July 12, the combined Q2 2024 operating profit consensus for four major defense firms—Hanwha Aerospace, Hyundai Rotem, LIG Nex1, and Korea Aerospace Industries (KAI)—reached KRW 1.1 trillion, an 85.7% increase from the same period last year (KRW 595 billion). Their combined quarterly revenue is expected to jump 85.4%, from KRW 5.38 trillion to nearly KRW 10 trillion.



For the full year, the four firms are projected to post a total operating profit of KRW 4.67 trillion, marking a 76.2% surge from 2023, when annual profits surpassed KRW 2 trillion for the first time.



Hanwha Aerospace Leads the Surge
Industry leader Hanwha Aerospace continues to drive sector growth with expanded exports of K9 self-propelled howitzers and Chunmoo multiple rocket launchers to Poland, as well as increased sales of munitions and missile systems.

Q2 Operating Profit: KRW 718.2 billion (+100.2% YoY)

Q2 Revenue: KRW 6.49 trillion (+132.97%)

2024 Full-Year Operating Profit Forecast: KRW 3.12 trillion (+80.4%)




Hyundai Rotem Strengthens Momentum with K2 Exports
Hyundai Rotem is benefiting from expanded exports of K2 tanks to Poland. A second contract worth KRW 8.9 trillion for 180 units was recently signed, and 133 tanks have been delivered as of mid-2024.

Q2 Operating Profit: KRW 234.8 billion (+108.2%)

Q2 Revenue: KRW 1.39 trillion (+27.3%)

2024 Full-Year Operating Profit Forecast: KRW 949.9 billion (+108.1%)



LIG Nex1 Grows on Missile Systems and UAE Demand
LIG Nex1 is showing robust growth driven by the mass production of Cheongung-II (M-SAM Block II) guided missiles and exports to the United Arab Emirates (UAE).

Q2 Operating Profit: KRW 84.1 billion (+71.1%)

Q2 Revenue: KRW 886.5 billion (+46.6%)

2024 Full-Year Operating Profit Forecast: KRW 359.6 billion (+56.5%)




KAI Faces Temporary Dip but Strong Outlook
Korea Aerospace Industries (KAI) is expected to post a slight decline in Q2 performance due to delays in FA-50 deliveries to Poland. However, with major deliveries scheduled for H2, full-year earnings are still projected to rise significantly.

Q2 Operating Profit: KRW 67.7 billion (–8.9%)

Q2 Revenue: KRW 890.5 billion (–0.15%)

2024 Full-Year Operating Profit Forecast: KRW 329.6 billion (+36.9%)

Analysts say the sector is entering a new phase of structural growth, driven by increased global security needs and South Korea’s strengthened position as a competitive exporter of advanced defense systems.

 

 

 

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