Poongsan’s sale of ammunition, artillery shells surges on Ukraine war

Poongsan Corp., one of South Korea’s leading copper smelters and defense equipment makers, saw its sales of ammunition and artillery shells surge over the past month, boosted by the protracted Russia-Ukraine war.

According to the Financial Supervisory Service (FSS) on Tuesday, Poongsan has clinched deals worth a combined 574.8 billion won ($465 million) with three Korean defense companies since Dec. 20.

The one-month figure is greater than the company’s 2020-2021 total defense sales of 549.4 billion won.

Specifically, Poongsan signed a 116.7 billion won supply deal with the state-run Defense Acquisition Program Administration (DAPA); a 293.4 billion won contract with Hyundai Rotem Co.; and a 164.7 billion deal with Hanwha Aerospace Co., according to FSS data.

The non-ferrous metal company manufactures various types of ammunition and large-caliber shells, including 5.56-millimeter rifle bullets, 155 mm howitzer shells, anti-aircraft shells, mortar shells, tank shells and naval artillery shells.

Poongsan didn’t provide details, including the type of shells, for its recent deals, but industry watchers said most of the contacts with the three local firms were 155 mm artillery shells for DAPA and Hanwha’s K9 self-propelled howitzers and 120 mm tank shells for Hyundai Rotem’s K2 Black Panther battle tanks.

UKRAINE WAR, RISING COPPER PRICES

Analysts said Poongsan’s strong sales were partly due to the prolonged war in Ukraine.

In December, Hyundai Rotem, an affiliate of Hyundai Motor Co., delivered the first batch of 10 K2 Black Panther tanks to Poland as part of the 120 tanks worth $3.4 billion it contracted with the Baltic country in August.

Hanwha Defense Co., a unit of Hanwha Aerospace, also delivered the first batch of 24 K9 self-propelled howitzers to Poland as part of a total of 212 units worth $2.4 billion.

The K2 tank and K9 howitzer contracts were part of a broader $15 billion deal forged in July between Korea’s weapons makers and Poland’s defense authorities.

Under the megadeal, Poland agreed to buy 980 units of the K2 tanks, 648 units of the K9 self-propelled howitzers and 48 units of the FA-50 light combat aircraft.

Poland, a NATO member that shares its borders with Ukraine as well as the Russian enclave of Kaliningrad, has sent warplanes and other weapons to Ukraine in support of the Ukrainian government.

The recent gains in copper prices are also providing a tailwind for Poongsan’s earnings, industry officials said.

Poongsan is widely expected to poster stronger 2023 operating profit than its estimated 2022 profit of 243.6 billion won.

The company plans to release its 2023 earnings outlook next month.

Write to Ik-Hwan Kim at lovepen@hankyung.com
In-Soo Nam edited this article.