Sales in Defense Sector Rise with K2 Tank Exports to Poland
Changwon Plant in Gyeongnam Achieves Triple-Digit Operating Rate at 104.8%
Domestic defense company Hyundai Rotem has surpassed 4 trillion won in sales for the first time since its founding. This is due to increased sales in the defense business, including the export of K2 tanks to Poland.
On the 6th, Hyundai Rotem announced that its consolidated operating profit for last year was preliminarily estimated at 456.6 billion won, an increase of 117.4% compared to the previous year. Sales rose 22% year-on-year to 4.3766 trillion won. Net profit increased by 158.5% to 45.3 billion won. Operating profit in the fourth quarter was 161.7 billion won, up 131.7% from the same period last year. Sales and net profit for this quarter were 1.4408 trillion won and 145 billion won, respectively.
Hyundai Rotem’s sales growth is due to an increased proportion of the defense sector. Since the third quarter of last year, Hyundai Rotem’s Defense Solutions division has recorded a quarterly sales share of over 50% for the first time since its founding. Previously, the Rail Solutions division was the main business, accounting for more than half of sales. However, as weapon systems including the K2 tank gained popularity overseas, the share of the Defense Solutions division also grew.
Hyundai Rotem’s export of K2 tanks to Poland is on track and running smoothly. Currently, Hyundai Rotem is negotiating a second contract for the K2 tanks at a level similar to the first contract, around 180 units. Various options, such as the hard-kill active defense system that launches interceptors to explode incoming missiles in mid-air, are being discussed, with plans to finalize negotiations within the first half of the year.
As the defense sector’s share increased, the operating rate also reached triple digits. The operating rate of the Defense Solutions division at the Changwon plant in Gyeongnam, which produces K2 tanks, recorded 104.8%. Due to the high proportion of defense exports, Hyundai Rotem’s defense business operating rate is significantly higher than other major defense export companies such as Hanwha Aerospace (89.8%), Hanwha Systems (85.8%), LIG Nex1 (76.1%), and Korea Aerospace Industries (69.3%).
Hyundai Rotem plans to continue the export momentum of its flagship K2 tank. After the second contract with Poland, it intends to expand exports to Eastern European countries within the North Atlantic Treaty Organization (NATO), leveraging strengths such as rapid delivery, quality, and modernization systems for military equipment. It is currently competing with Germany’s Leopard 2A8 for about 250 tanks in the Romanian military’s modernization program. Additionally, in September last year, Suren Papikyan, Armenia’s Minister of Defense, visited Korea and reportedly reviewed the possibility of purchasing K2 tanks. Export discussions are also underway with Oman, India, and the Czech Republic.
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