Western arms makers see revenues boom on Ukraine conflict

Weapons manufacturers are benefitting from the deliveries to Ukraine by the US and allies coupled with the rearmament of domestic militaries

The largest Western military and defense corporations have seen revenues spike due to orders linked to the Ukraine conflict, third-quarter earnings released this week revealed. The surge in revenues is attributed to the sharp increase in military spending by Western countries in order to supply weapons to Ukraine and rearm their own militaries.

US-based Lockheed Martin, General Dynamics, and RTX (formerly known as Raytheon Technologies Corp) all reported better than expected results over the past week, and guided that they expect still higher revenues in the upcoming quarters.

Lockheed Martin said that its third quarter results “were at or above our expectations across the board” and that the backlog remained “robust at $156 billion as both domestic and international orders were strong.” The company’s net earnings for the past nine months amounted to roughly $5 billion, against $3.8 in the same period last year.

The combat systems branch of General Dynamics saw its revenues spike by nearly 25% in the third quarter against the same period in 2022. The unit makes the armored vehicles, tanks, and artillery that are sent to Ukraine.

“[Artillery] has been a big pressure point up to now with Ukraine, one that we’ve been doing everything we can to support our [US] Army customer,” the company’s chief financial officer, Jason Aiken, said on a call with Wall Street analysts on Wednesday, as cited by Reuters.

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Revenue for Boeing’s Defense, Space & Security unit for the quarter totaled $5.5 billion, up 3% from the same time last year. The company has supplied to Ukraine armaments including ScanEagle unmanned aerial vehicles and Harpoon and Hellfire missiles. It also recently delivered its first T-7A Red Hawk jet to the US Air Force.

RTX reported a 12% rise in adjusted revenue in the third quarter. In an earnings call this week, the company revealed it had received $3 billion worth of orders since the start of Russia’s military operation in Ukraine in February 2022, and expects more in the near term.

The defense systems unit of Northrop Grumman posted 6% higher earnings on demand for ammunition and the rocket motors used in guided multiple-launch rocket systems, the company said.

Across the Atlantic, Swedish aircraft manufacturer Saab raised its sales outlook for the year this week amid high demand. Germany’s Rheinmetall is due to report third-quarter earnings next month, but preliminary results unveiled this week show that the company expects operating profit to top estimates by 15% and amount to roughly $202 million on strong demand for weapons and ammunition.

Defense contractors also expect a boost in orders due to the recent escalation of hostilities in Gaza, which already sent their stocks surging this week.

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“We’ve gone from 14,000 [artillery] rounds per month to 20,000 very quickly. We’re working ahead of schedule to accelerate that production capacity up to 85,000, even as high as 100,000 rounds per month. And I think the Israel situation is only going to put upward pressure on that demand,” General Dynamics’s Aiken was cited as saying.

Russian officials have repeatedly condemned the supply of Western weapons to Kiev, noting that it only exacerbates the conflict while doing little to deter Russia from achieving its military objectives. Moscow has described the conflict as a US-led proxy war against Russia in which Ukrainians are used as “cannon fodder.”

The continued military aid to Ukraine has also been growing increasingly unpopular with the populaces of Western countries. Numerous polls over the past months have shown rapidly shrinking public support for spending money on arming Ukraine instead of confronting domestic challenges such as inflation and the cost-of-living crisis.

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