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K-defense continues growth as demand climbs in Europe amid Russia-Ukraine conflict

Published: 03 Nov. 2025, 17:41 Updated: 03 Nov. 2025, 19:20

Marines stationed on Yeonpyeong Island fire K9 self-propelled howitzers during a live-fire drill near the Northern Limit Line in the Yellow Sea on June 25. [NEWS1]

Korea’s defense sector extended its strong performance into the third quarter of 2025, supported by growing rearmament demand in Europe amid the Russia-Ukraine war and increasing weapons imports from the Middle East and Southeast Asia.

Hanwha Aerospace reported on Monday that its consolidated revenue reached 6.49 trillion won ($4.5 billion), up 147 percent from a year earlier, while operating profit rose 79 percent to 856.4 billion won.

In its ground defense division, exports of key weapons such as the K9 self-propelled howitzer and Chunmoo multiple rocket launcher continued to rise, while production of Korean reconnaissance vehicles and antiaircraft guns also boosted results. The company's aerospace division returned to profitability thanks to higher demand for maintenance, repair and overhaul (MRO) services.

Hyundai Rotem also posted record quarterly earnings, reporting 1.62 trillion won in revenue, 277.7 billion won in operating profit and 198.4 billion won in net profit — up 48.1 percent in sales and 102.1 percent in operating profit from a year earlier.

The company’s order backlog surpassed 10 trillion won after it signed a second export deal for K2 tanks with Poland worth $6.5 billion, bringing its total backlog to 29.61 trillion won. Its rail business also secured orders worth 18 trillion won.

Other major defense firms are showing similar momentum.

LIG Nex1, which will report earnings on Thursday, is expected to post solid results driven by export growth in the Middle East and Southeast Asia. Korea Aerospace Industries (KAI), however, may see some revenue deferred to the fourth quarter due to delays in aircraft deliveries. KAI will report earnings on Wednesday.

The K239 Chunmoo multiple rocket launcher fires a high-explosive guided missile during a large-scale live-fire missile exercise at a shooting range in Boryeong, South Chungcheong on June 25, 2024. [NEWS1]

Industry experts say now is a critical time for Korea’s defense firms to shift from short-term export booms to sustainable business models.

“In the past, signing a contract itself was considered a success, but now the goal is to design structures that generate stable profits for decades,” said Chae Woo-suk, president of the Korea Defense Industry Association. “For K-defense to move to the next level, companies must focus on profitability and sustainability together.”

A clear trend across the sector is the move toward “package-type exports,” which bundle local assembly, technology transfer, training and long-term maintenance contracts. Analysts say these integrated deals create recurring revenue rather than one-time profit from initial deliveries.

Hanwha Aerospace exemplifies this shift. Building on cooperation among its domestic and overseas subsidiaries, the company has developed integrated land, sea and air defense solutions — from tanks and self-propelled howitzers to submarines, LNG carriers and aerospace systems like engines and satellites.

Hanwha Aerospace has also proposed customized business models that combine local production lines, technology transfers, training programs and follow-up maintenance services, turning one-off contracts into long-term partnerships. The company is focusing on high-value markets in the Middle East and Europe, emphasizing technology and operational capability over price competition.

“It is no longer just about selling weapons, but about exporting trust,” a Hanwha Aerospace official said. “Partnerships that stay with clients until the end make the difference between success and failure.”

Hyundai Rotem is taking a similar approach by linking its defense and railway businesses under a comprehensive export strategy. The company is expanding its overseas presence through local production infrastructure, long-term maintenance deals and stable spare parts supply systems.

“We can no longer compete globally with export structures that stop at single-delivery contracts,” an industry official said. “It’s time to lead the market with long-term revenue models that include local operations as well.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY PARK YOUNG-WOO [[email protected]]