[Heavy Industries ON] KAI Posts Strong Results Alone Amid Defense Slump... LAH Performance Disappoints

Third-Quarter Revenue Up 52% Year Over Year
LAH Deliveries Expected to Resume in Q4

While domestic defense companies struggled in the third quarter of this year, Korea Aerospace Industries (KAI) was the only one to post strong results. The transition to mass production of the KF-21 and exports of the FA-50 drove third-quarter revenue. However, delays in deliveries of the domestically developed Light Armed Helicopter (LAH) due to disruptions in engine supplies were a setback.

According to industry sources on November 10, KAI posted third-quarter revenue of 1.0643 trillion won, up 52% year over year. Operating profit rose 32% over the same period to 79.4 billion won. KAI's performance was strong compared with Hanwha Aerospace, whose operating profit fell 46% year over year in the third quarter, and Hyundai Rotem, which posted a 4.7% decline.

The second mass-production KF-21 supersonic fighter jet and a multipurpose unmanned aircraft demonstrator are unveiled at Korea Aerospace Industries (KAI) in Sacheon, Gyeongsangnam-do, on May 13. Yonhap News Agency

KAI's third-quarter revenue was driven by deliveries of fixed-wing aircraft. After about 10 years and six months of development, the KF-21 began its first mass-production deliveries in September. Deliveries of two aircraft in the third quarter generated revenue of 212.9 billion won. The first FA-50 delivery to Malaysia began in October, while 152.5 billion won in revenue was recognized in the third quarter based on project progress. As a result, new orders totaled 2.21 trillion won in the first three quarters, up 502% year over year. The order backlog stands at 26 trillion won.

Further KF-21 exports are also expected. Securities analysts expect geopolitical tensions to lead to an expansion of KF-21 mass production to 80 aircraft by 2028, up from the original 40. KAI is currently in talks with Indonesia with the aim of signing an export contract. Further exports to the Philippines, Malaysia, the United Arab Emirates (UAE), and other markets are also possible.

The KF-21, which took 10 years and seven months to develop after system development began, represents more than the mass production of a next-generation fighter. After KF-21 sales, follow-up support—including performance upgrades, parts supplies, maintenance, and software upgrades—is expected to continue for decades, supporting increasingly stable revenue growth.

A KAI official said, "We are building a stable business foundation based on a revenue structure that balances exports with the domestic industry. Given the expansion of our key domestic and overseas businesses, we have ample potential for future growth."

This content was produced with the assistance of AI translation services.