Korea Aerospace Second Quarter Net Profit Down but Bullish on Stable Future Growth

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Korea Aerospace Industries Ltd. (KAI) has reported an operating profit of 8.4 billion won ($6.4 million) over sales of 733.5 billion won for the second quarter of this year. This is a 75.6% plunge in operating profit compared to the same period last year, while the revenue increased 9.7%.

Net income dropped 80.3% to 9.9 billion won during the April-June period, according to the company’s regulatory filing on Aug 8.

South Korea’s sole aircraft manufacturer which has been racking up orders recently — including last year’s deal to export 48 FA-50 light attack aircraft to Poland, and another 18 of the same type to Malaysia this year– has attributed the profit drop to the time lag between contract awards and product deliveries.

Performance is reflected in the books when the goods are delivered, and there were fewer exports recognised as revenue in the second quarter of this year, the company said, anticipating a meaningful improvement in performance from the third quarter.

“In the second half of the year, FA-50 exports and Air Force ILS (Integrated Logistics Support) results will be reflected in the books one after another,” said a KAI official was quoted as saying, “Our current export balance is 25 trillion won, and we expect stable sales growth in the future.” The state-owned company’s second-quarter net profit plunged was mainly due to investment in new businesses. Investments in new growth business areas such as ultra-small satellites, and the cost to expand the country’s helicopter market and boost exports of its Surion helicopters.

Sacheon-based KAI said its major businesses, including developing the country’s homegrown KF-21 fighter jet, are doing okay, and its aircraft body business is recovering. It added that it won contracts worth 247.9 billion won in the second quarter, up 85.8% from a year ago. –kr/adj/mgm (Image: DAPA)