Hanwha Aerospace is set to make a substantial investment to actively respond to global geopolitical crises and secure future growth drivers. This move comes in light of increasing defense budgets in Europe, shifts towards self-defense, and the strengthening of the U.S. maritime defense and shipbuilding industry amid rapidly changing international circumstances.
During a board meeting on March 20, Hanwha Aerospace approved a rights offering worth 3.6 trillion won. This funding aims to secure overseas bases for ground defense, shipbuilding, and maritime defense, positioning the company as a global top-tier player in these sectors.
Hanwha Aerospace plans to establish strategic overseas production bases in regions such as Europe, the Middle East, Australia, and the United States, which are projected to experience a ‘Big Cycle’ in defense demand by 2035, targeting revenues of 70 trillion won and operating profits of 10 trillion won.
This rights issue will be conducted through a method involving both shareholder allocations and a public offering for any unsubscribed shares. The allocation date for new shares is set for April 24, with subscription for existing shareholders from June 3 for two days, followed by the public offering from June 9 to 10.
Expanding Overseas Production Bases for Ground Defense
Hanwha Aerospace plans to utilize 1.6 trillion won of the raised capital for investments in overseas ground defense facilities and equity investments in defense collaborations. Given the expected steady increase in the demand for ground weapon systems such as air defense, artillery, and armored vehicles due to geopolitical tensions and defense policies in various countries, Hanwha Aerospace intends to proactively respond by establishing local production bases, especially in Europe and the Middle East where local partnerships are preferred over simple weapon purchases.
The company will enhance its localization strategy for next-generation key products, including the Chunmoo Multiple Launch Rocket System, Redback armored vehicle, air defense systems, and ammunition, aiming to achieve the same status as the globally successful K9 howitzer.
Strengthening Domestic Defense Investments
Alongside expanding overseas production bases for ground defense, Hanwha Aerospace will enhance the role of its domestic facilities as a Global R&D Hub and Mother Factory. An investment of 900 billion won will be directed towards establishing smart factory facilities for domestic propulsion systems and upgrading major defense business facilities.
Additional Investments in Maritime Defense and Shipbuilding
Hanwha Aerospace plans to invest 800 billion won to secure overseas bases for maritime defense and shipbuilding, particularly focusing on the U.S. market. The company is already implementing a multi-yard strategy that links South Korea's Okpo shipyard, the U.S. Philly shipyard, and Singapore's Daewoo shipyard to strengthen its competitiveness and footprint in the global maritime defense and shipbuilding markets. It also intends to reinforce this strategy through additional investments in overseas shipbuilding facilities, such as strategic equity stakes in Austal, which has shipyards in the U.S. and Australia.
A favorable environment for investments in maritime defense and shipbuilding is being established in the U.S., due to recent legislation aimed at strengthening the shipbuilding industry and positive assessments of South Korean shipbuilding by key figures, including former President Trump. Hanwha Group's ownership of the Philly shipyard positions it as a crucial player in the U.S. maritime defense and shipbuilding market.
The U.S. Navy's ship procurement and MRO (Maintenance, Repair, and Overhaul) market is expected to see continuous growth for over the next decade. Hanwha Aerospace plans to aggressively enter the surface combatant and support ship market in line with U.S. naval expansion policies and vessel construction plans.
Strengthening Aerospace Initiatives Through Drone Engine Investments
Hanwha Aerospace will also invest 300 billion won in developing drone engine facilities to secure mass production capabilities. Based on its competencies in aviation engines and parts, the company aims to develop its own drone engines while expanding collaborations with global drone manufacturers and enhancing technological independence in aerospace engines.
"As our continuous efforts for growth have led to sustained profits and an increase in corporate value, we aim to achieve a quantum leap in corporate value once again by making strategic large-scale investments to elevate ourselves to a top-tier global player in defense, shipbuilding, and aerospace," said Hanwha Aerospace CEO Son Jae-il.
