South Korea’s Defense Giants to Hit US$28 Billion in 2025 Sales

South Korea’s four largest defense industry companies are projected to surpass ₩40 trillion (US$28.45 billion) in combined annual sales for the first time in 2025, driven largely by overseas exports.

According to financial data provider FnGuide, Hanwha Aerospace, LIG Nex1, Korea Aerospace Industries (KAI), and Hyundai Rotem are expected to record combined sales of 40.9172 trillion won this year, up 81.6% from 22.5267 trillion won in 2024 and more than triple the 12.7984 trillion won posted in 2021.

Operating profits are rising in parallel. The four companies are forecast to post 5.2310 trillion won in operating profit in 2025, nearly doubling the 2.6590 trillion won of 2024. In 2021, operating profits were 512.8 billion won, representing more than a tenfold increase in four years.

Exports have been the key driver. Data from the electronic disclosure system show overseas sales reached 10.59 trillion won, or 60% of the combined 17.75 trillion won in sales during the first half of 2025, up from a 35% export ratio in 2021. With additional international supply contracts scheduled for delivery this year, the ratio is expected to rise further.

Profitability metrics are also  improving. The operating profit margin of the four companies was 4.0% in 2021 and is projected to reach 12.8% in 2025, in line with global peers. For comparison, Lockheed Martin reported margins of 8–10% this year, while Northrop Grumman posted 13.8% in Q2.

Industry representatives attribute the improvement to economies of scale and cost reductions from mass production. “Previously, margins were low due to a domestic focus and high R&D costs,” one insider said. “As production volumes increased, costs declined, and profitability improved.”

Looking ahead, the companies have an order backlog valued at 103.47 trillion won as of June 2025, surpassing 100 trillion won for the first time. In 2021, the backlog stood at 42.22 trillion won. The current backlog secures exports for the next four to five years, with further negotiations ongoing with buyers in Europe, the Middle East, and Latin America.

A UN report shows global military spending reached a record US$2.7 trillion in 2024, a 9.4% increase and the steepest annual rise in three decades. NATO data released in August confirmed all 32 allies will meet the 2% of GDP defense spending target this year, with a commitment to reach 5% percent by 2035. Analysts note that the expansion of defense budgets is generating unprecedented demand for advanced platforms, benefiting companies such as Lockheed Martin, General Dynamics, and L3Harris Technologies, as well as newer entrants in the sector.