Due to war, revenues of the world’s leading arms manufacturers are growing – study
3 December 2024 14:49
Revenues from the sale of arms and military services by the 100 largest companies in the industry reached $632 billion. This is reported on the website of the Stockholm International Peace Research Institute (SIPRI), "Komersant Ukrainian" reports.
The increase in arms revenues was observed in all regions, but the growth was particularly sharp among companies based in Russia and the Middle East. In general, the researchers note, smaller manufacturers responded more effectively to new demand related to the wars in Ukraine and Gaza, rising tensions in East Asia, and rearmament programs in other countries.
“There was a marked increase in arms revenues in 2023, and this is likely to continue in 2024. Revenues of the top 100 arms manufacturers still do not fully reflect the scale of demand, and many companies have begun hiring, indicating that they are optimistic about future sales,” said Lorenzo Scarazzato, researcher at SIPRI’s Military Expenditure and Arms Production Program.
How are American arms manufacturers doing with revenues?
the 41 companies in the top 100 based in the United States recorded arms sales revenues of $317 billion, half of the total arms sales revenue of the top 100 and 2.5 percent more than in 2022.
Of the 41 US companies, 30 increased their arms revenues in 2023. However, Lockheed Martin and RTX, two of the world’s largest arms manufacturers, were among those that registered a drop.
As Dr. Nan Tian, Director of Military Expenditure at SIPRI, explains, “Large companies like Lockheed Martin and RTX, which produce a wide range of weapons, often depend on complex, multi-tiered supply chains, which made them vulnerable to persistent supply chain issues in 2023 – this was particularly true in the aeronautics and missile sector.”
Europeans lag behind the rest of the world in revenue growth
The total revenue of 27 of the top 100 companies in Europe (excluding Russia) in 2023 amounted to USD 133 billion. This is only 0.2 percent more than in 2022, which is the smallest increase in any region of the world.
European arms companies that produce complex weapons systems were mostly working under old contracts in 2023, and thus their revenues for the year do not reflect the influx of orders. In addition, according to Lorenzo Scarazzato, the production of complex weapons systems takes longer.
On the other hand, a number of European manufacturers reported a significant increase in revenues from arms sales due to demand related to the war in Ukraine, in particular for ammunition, artillery, air defense, and ground systems. For example, Germany’s Rheinmetall increased its production capacity of 155mm ammunition, and its revenues grew due to deliveries of Leopard tanks and new orders, including through war-related “ring exchange” programs, under which countries supply military goods to Ukraine and receive replacements from allies.
Revenues of Russian firms have risen sharply
The total revenue of the two Russian companies in the top 100 companies grew by 40% to about $25.5 billion. This was almost entirely due to a 49 percent increase in arms sales revenue recorded by Rostec, the state-owned holding company that controls many arms manufacturers, including seven previously on the top 100 list for which individual revenue data could not be obtained.
“Official data on Russian arms production is scarce and questionable, but most analysts believe that the production of new military equipment increased significantly in 2023,” said Dr. Nan Tian. In particular, he said, it is believed that combat aircraft, helicopters, UAVs, tanks, ammunition and missiles were produced in greater numbers as Russia continued its offensive against Ukraine.
South Korean and Japanese companies lead the way in the region
the 23 companies in the top 100 based in Asia and Oceania recorded a 5.7 percent year-on-year increase in arms sales revenue to $136 billion. Four South Korean companies recorded a combined 39 percent increase in arms revenues to $11.0 billion. Revenues of five Japanese-based companies increased by 35 percent to $10 billion. Japan’s military buildup policy since 2022 has led to a flurry of domestic orders, with the value of new orders for some companies increasing by more than 300 percent.
“The rapid growth of South Korean and Japanese arms sales revenues reflects a broader pattern of military buildups in the region in response to heightened threat perceptions,” said Xiao Liang, a researcher at SIPRI’s Military Expenditure and Arms Production Program. South Korean firms are also trying to increase their share of the global arms market, including demand in Europe related to the war in Ukraine.
Middle Eastern arms manufacturers are also responding to the conflicts in Gaza and Ukraine
Six of the top 100 arms companies were based in the Middle East. Their total military revenues grew by 18 percent to $19.6 billion.
With the outbreak of the Gaza war, the arms sales of the three Israeli companies in the top 100 reached $13.6 billion. This was the highest figure ever recorded by Israeli companies in the SIPRI Top 100. Revenues of the three companies based in Turkey increased by 24 percent to $6.0 billion, driven by exports spurred by the war in Ukraine.
