The annual operating profit of the four major domestic defense companies is expected to exceed KRW 4 trillion this year. By the third quarter (July-September), the combined operating profit has already surpassed last year's annual performance by over KRW 1 trillion, reaching KRW 3.4929 trillion.

According to disclosures from each company on the 16th, the cumulative operating profit for the year up to the third quarter for the four major domestic defense companies—Hanwha Aerospace, Korea Aerospace Industries (KAI), Hyundai Rotem, and LIG Nex1—was recorded at KRW 3.4929 trillion. This figure exceeds last year's total annual operating profit (KRW 2.4182 trillion) by 44.4%, making it likely that the annual combined operating profit will surpass KRW 4 trillion with three months remaining in the year.

Particularly, since the fourth quarter (October-December) is traditionally when the defense industry sees results, there are projections that the final annual combined operating profit of the four defense companies could reach KRW 4.5 trillion.

The combined operating profit of these four major defense companies was KRW 804.4 billion just two years ago in 2023, falling short of KRW 1 trillion. However, last year it surpassed KRW 2 trillion for the first time, reaching the KRW 2.4 trillion range, and this year the possibility of surpassing KRW 4 trillion has increased. If the projections hold, this would represent a fivefold increase in just two years.

By company, Hanwha Aerospace achieved an operating profit of KRW 2.2817 trillion from January to September this year, accounting for 65% of the total profit. Although the company's scale has grown with the consolidation of its subsidiary Hanwha Ocean's performance from this year, the growth was also supported by large-scale overseas orders in the existing defense business sector, such as additional contracts for the K9 self-propelled howitzer with Poland and the export of the AS9 Huntsman to Australia. Hyundai Rotem followed with an operating profit of KRW 738.2 billion, LIG Nex1 with KRW 280.8 billion, and KAI with KRW 192.2 billion.

Hanwha Aerospace, having opened the era of KRW 10 trillion in sales and KRW 1 trillion in operating profit for the first time in the domestic defense industry last year, is expected to exceed KRW 20 trillion in sales and KRW 2 trillion in operating profit this year. The company is also maintaining an operating profit margin in the 10% range. Hyundai Rotem also exceeded its annual performance from last year (KRW 456.6 billion) by 61% in cumulative operating profit for the third quarter, driven by large-scale overseas orders such as the second export contract for the K2 tank with Poland.

With the order backlog of these companies reaching KRW 118 trillion, there are projections that growth will continue for the next two to three years.

In terms of defense order backlog, Hanwha Aerospace had the largest with KRW 39.1811 trillion (defense sector), followed by Hyundai Rotem with KRW 29.6088 trillion, KAI with KRW 26.2673 trillion, and LIG Nex1 with KRW 23.43 trillion.

Kiwoom Securities recently reported that "domestic defense companies are showing strong performance this year due to sales growth and profit improvement from expanded defense exports," and projected that "new order growth will continue for the next two to three years, considering the expansion of export product lineups and regional diversification." It particularly anticipated continued performance growth for Hanwha Aerospace and Hyundai Rotem, whose overseas sales are increasing, especially centered on Poland.

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