K-defense sector to reach annual export of $16 bn for two consecutive years

The South Korean defense market is forecast to sign export contracts worth more than 20 trillion won (15.7 billion) combined this year on the back of strengthened military spending worldwide. 

The Korean defense export reached a record high of $17 billion last year, up 134.4% from the prior year’s $7.25 billion.

The Ministry of Trade, Industry, and Energy announced it set the country’s defense export target to above $17 billion for this year, surpassing last year’s figures. 

Among Korea’s total defense exports in 2022, weapons contracts with Poland reached $12.4 billion, which encompasses the sale of K-2 tanks, K9 self-propelled artillery, FA-50 fighter jets, and more. 

When combined with the sale of ammunition and follow-up munitions support, experts say the total export contract could be as much as triple $12.4 billion. 

In his new year address on Jan. 1, President Yoon Suk-yeol said, “Infrastructure construction, nuclear power plants, and the defense industry will be fostered as new export engines.”

Industry insiders forecast the defense sector to continue to garner large-scale export contracts from beyond Poland this year, such as from Australia, Norway, Romania, and Finland. 

Hanwha Aerospace Co. is expected to sign a contract for the export of Redback Infantry Fighting Vehicles worth up to $7.5 billion.

Hyundai Rotem Co. is discussing exports of K-2 tanks with Norway and Egypt, while Hanwha Aerospace is also discussing K9 sales to Finland and Romania. The Korea Aerospace Industries (KAI) is talking about exports of FA-50 to Malaysia and Colombia. 

Experts say the rising demand for Korean defense products is thanks to the price competitiveness, sometimes up to 70% lower in price than products of equivalent performance made in more developed countries.

Another selling point is speedy delivery. 

Ten K-2 tanks and 24 K9 self-propelled artilleries have arrived at Gdynia Naval Base in Poland on Dec. 6 last year, only four months after concluding the contract. 

The consensus for the operating profit for Hanwha Aerospace and KAI are expected to rise by 31.96% and 100.64% respectively this year, according to financial information provider FnGuide.

The consensus for LIG Nex1 Co. rose by 17.86% on-year. 

Write to Ik-Hwan Kim at lovepen@hankyung.com
Jee Abbey Lee edited this article.