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Headquarters of Korea Aerospace Industries (KAI) in Sacheon, South Gyeongsang Province, South Korea (Photo credit: KAI) |
[Alpha Biz= Kim Jisun] South Korea’s major defense companies reported sharply contrasting second-quarter performances.
Hanwha Systems posted KRW 768.2 billion in revenue, up 11.8% year-on-year, but operating profit plunged 60.4% to KRW 33.5 billion, dragging its operating margin down from 12.3% to 4.4%.
The steep decline was largely due to the integration of loss-making Philippine shipyard operations, with additional costs arising from workforce dispatch and adjustments to previously omitted expenses. The company described Q2 as a “turning point” to stabilize production and lay the groundwork for future profitability.
In contrast, Korea Aerospace Industries (KAI) reported KRW 828.3 billion in revenue and KRW 85.2 billion in operating profit, a 14.7% year-on-year and 82.1% quarter-on-quarter increase. The operating margin rebounded to 10.3%, driven by strong export gains, improved product mix, and structural business improvements. Notably, export contracts surged—highlighted by a June deal to deliver 12 FA-50 fighter jets to the Philippines, boosting complete aircraft exports by nearly 19,500% year-on-year to KRW 977.7 billion.
Looking ahead, Hanwha Systems expects steady growth in both defense and ICT segments but remains cautious about potential cost pressures from U.S. steel tariffs affecting shipyard operations. KAI anticipates further momentum in the second half, with the FA-50PL evaluation for Poland and bids for large-scale defense projects such as the UJTS system scheduled to ramp up.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
