Seoul: South Korean defense giant Hanwha Aerospace Co. announced its ambitious goal to achieve 30 trillion won (US$20.4 billion) in sales this year, driven by robust global demand for its defense equipment and a favorable exchange rate due to a weak Korean won.
According to Yonhap News Agency, this sales target is almost three times the 11.2 trillion won reported by the company in 2024. An Byung-chul, president and head of the strategy division at Hanwha Aerospace, highlighted the favorable exchange rate and increased demand for defense products as key factors that could significantly boost this year's earnings. An emphasized that quick delivery of orders and enhanced productivity would contribute to reducing manufacturing costs.
The company projects an operating profit of 3 trillion won for this year, marking a 76 percent increase from a 1.7 trillion won profit last year. This optimistic earnings outlook is partially attributed to equity gains from the shipbuilding affiliate Hanwha Ocean Co., which have been reflected since the fourth quarter of the previous year. Hanwha Aerospace holds a 30.44 percent stake in Hanwha Ocean, previously known as Daewoo Shipbuilding and Marine Engineering Co.
An noted that global defense spending is anticipated to rise from 3,595 trillion won last year to 4,315 trillion won by 2035, fueled by the ongoing Russia-Ukraine conflict, escalating tensions in the Middle East, and strategic competition between the United States and China. For instance, the U.S. Navy plans to expand its fleet from 295 to 390 warships by 2054.
Hanwha Aerospace plans to capitalize on this momentum by securing production bases in strategic markets and forming partnerships with local companies. An emphasized the importance of localization in production and indicated that significant overseas investments are necessary for growth.
To further its global aspirations, Hanwha Aerospace plans to invest 11 trillion won over four years through 2028. Part of this investment will be funded through a share sale plan aimed at raising 3.6 trillion won. This includes raising 2.3 trillion won through retail investor share sales and 1.3 trillion won by issuing shares to its three affiliates.
Of the total investment, 6.27 trillion won, or 57 percent, is earmarked for overseas investments to secure future growth opportunities. Proceeds from the planned share sale will be used to acquire strategic production bases in Europe, the Middle East, Australia, and the United States, capitalizing on rearmament efforts in Europe and U.S. shipbuilding expansion.
An also disclosed plans to invest 800 billion won to acquire a stake in an overseas shipyard in North America, Europe, or the Middle East by 2026. Hanwha Aerospace reported an order backlog of 31.4 trillion won at the end of 2024, with its core products including the K9 self-propelled howitzer and the Chunmoo multiple launch rocket system.
Hanwha Aerospace shares surged by 8.72 percent to close at 698,000 won on Tuesday, while Hanwha Ocean shares rose by 8.32 percent to 67,700 won. The broader Korea Composite Stock Price Index (KOSPI) increased by 0.26 percent.