2025-03-31
Global Defense Industry Growth Accelerates After Trump’s Inauguration
Expansion of Domestic Production of Diesel Engines for K9 Howitzers to Other Land Weapons
Speeding Up the Development of Hybrid Engine Systems
[Edaily Marketin Reporter Kwon So-hyun] STX Engine (077970) is strengthening its defense business in response to the global trend of increasing defense budgets. The company plans to accelerate sales growth and improve profitability by localizing diesel engines for various land weapon systems and developing hybrid engine systems.
According to the International Institute for Strategic Studies (IISS) on the 31st, last year’s global defense budget reached $2.46 trillion (approximately KRW 3,614.72 trillion), an increase of $220 billion from the previous year. The annual growth rate, which was 3.5% in 2022 and 6.5% in 2023, rose to 7.4% last year, indicating an accelerating trend. The share of global defense spending as a percentage of GDP also increased from 1.6% in 2022 and 1.8% in 2023 to an average of 1.9% last year.
Since 2022, conflicts such as the Russia-Ukraine war and the Israel-Hamas war have surged, and expectations are high that geopolitical tensions will intensify further. In particular, following the inauguration of U.S. President Donald Trump earlier this year, the defense market is expected to see even greater growth due to the increase in the U.S. defense budget, rising global security threats, the need for defense modernization, expanded military alliances and cooperation, and the entry of private-sector companies into the defense industry. The U.S. has already begun pressing European nations to increase their NATO defense spending.
STX Engine aims to actively capitalize on this opportunity. The company specializes in high-performance marine engines and marine machinery fuel systems, manufacturing engines for military vessels, commercial ships, and submarines. It primarily supplies components to the Defense Acquisition Program Administration, Hanwha Aerospace, Hyundai Rotem, and Hanwha Ocean.
The K-defense boom is driving STX Engine’s overall performance, with defense sales leading the company’s revenue. Last year, its civilian business, which supplies ship and power generation engines, accounted for 41.4% of total revenue, while its defense engine and component business contributed 43.9%. The electronic communications division, which provides meteorological radars and defense communication equipment, made up 14.6% of total sales.
An STX Engine representative stated, “As maritime power nations strengthen their military capabilities, demand for defense-related orders is surging,” adding, “Due to the impact of the Russia-Ukraine war and the Israel-Hamas conflict, demand for defense equipment is increasing in countries such as Poland, Egypt, the United Arab Emirates, and Australia.”
Last year, STX Engine successfully localized the diesel engine for the K9 self-propelled howitzer after three years of development, and it has now entered mass production. The company is also working on localizing diesel engines for other land-based weapon systems, such as tracked and mounted vehicles. Additionally, it is preparing to develop a hybrid engine system suitable for future ground combat equipment to improve fuel efficiency, enhance acceleration, and optimize maintenance systems.
With these efforts, STX Engine aims to accelerate its performance growth. The company’s sales revenue last year reached KRW 724.6 billion, a 14.9% increase from the previous year. Operating profit soared by 123% to KRW 42.2 billion. Since turning a profit in 2023, STX Engine has expanded its profitability, riding the wave of the K-defense industry boom.