Hanwha Aerospace has embarked on efforts to win the Canadian Patrol Submarine Project (CPSP).

Hanwha Aerospace announced on the 30th that on the 29th (local time) in Ontario, Canada, it signed a memorandum of understanding (MOU) with the Automotive Parts Manufacturers Association (APMA) and Hanwha Ocean to establish a joint venture for the production of military vehicles and special-purpose industrial vehicles.

The joint venture will move forward in earnest if Hanwha Ocean succeeds in winning the CPSP. The CPSP is a project under which the Canadian government has ordered up to 12 diesel submarines of the 3,000-ton class, amounting to 60 trillion KRW. Hanwha Ocean is currently competing with the German company ThyssenKrupp Marine Systems (TKMS). A preferred bidder will be selected in the first half of this year.

The joint venture will be responsible for developing ground weapon systems for the Canadian Army and building a production system. It then plans to expand into the design and production of special industrial vehicles.

The Industrial Research Institute said in a report that day, “Canada’s next-generation submarine program is a national strategic project that includes industrial cooperation and supply chain reorganization,” and “It is expected to serve as an opportunity to develop into a long-term security and industrial-cooperation partnership with Canada, going beyond simple defense exports.”

Separately, Hanwha Aerospace released its first-quarter results that day. Operating profit was 638.9 billion KRW, up 20.6% from the first quarter of last year. Revenue was 5.751 trillion KRW, up 4.9% from a year earlier.

By business, the ground defense division posted revenue of 1.2211 trillion KRW and operating profit of 208.7 billion KRW. Revenue grew 5%, but operating profit fell 31%. Reflecting the Norwegian export contract for the multiple-launch guided missile ‘Cheonmu’ (1.3 trillion KRW), the order backlog reached a record high of 39.7 trillion KRW.

The aerospace division recorded revenue of 661.2 billion KRW and operating profit of 22.6 billion KRW. Revenue increased 25%, and operating profit rose 553%. Hanwha Aerospace explained that “an increase in military volumes and in the share of higher-margin businesses drove the improvement in results.”

Hanwha Ocean reported revenue of 3.2099 trillion KRW and operating profit of 441.1 billion KRW, with revenue up 2% and operating profit up 71%. Expanding the share of high-value vessels such as liquefied natural gas (LNG) carriers and reductions in material costs are cited as factors improving profitability.