REVENUE FOR THE TOP 100 ARMS MAKERS ROSE 4.2% YEAR-ON-YEAR TO $632 BILLION IN 2023

Mon 02 December 2024:

Sales revenue for the world’s largest 100 arms makers rose 4.2% year-on-year to $632 billion in 2023, an international think tank report showed on Monday.

While arms revenue hikes were reported across all regions, companies based in Russia and the Middle East saw particularly sharp increases, reflecting heightened demand fueled by ongoing conflicts and geopolitical tensions, the Stockholm International Peace Research Institute (SIPRI) said in its report.

Smaller producers have been more agile in meeting the surge in demand driven by the wars in Gaza and Ukraine, rising tensions in East Asia, and global rearmament initiatives, it explained.

The total arms revenues of the world’s top 100 companies rebounded last year after a decline in 2022, with nearly three-quarters reporting year-on-year growth.

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“There was a marked rise in arms revenues in 2023, and this is likely to continue in 2024,” said Lorenzo Scarazzato, a researcher with the SIPRI Military Expenditure and Arms Production Program.

“The arms revenues of the top 100 arms producers still did not fully reflect the scale of demand, and many companies have launched recruitment drives, suggesting they are optimistic about future sales,” Scarazzato added.

Dominating the top 100 with a 50% share, the arms revenues of the 41 US-based companies generated $317 billion, rising 2.5% from a year ago.

On the other hand, Lockheed Martin and RTX, the world’s two largest arms producers, saw a decline in arms revenues.

Nan Tian, director of SIPRI’s Military Expenditure and Arms Production Program, stated that major companies like Lockheed Martin and RTX often depend on complex, multi-layered supply chains, which left them vulnerable to supply chain disruptions in 2023.

“This was particularly the case in the aeronautics and missile sectors,” Tian added.

The arms revenues of the 27 Top 100 companies based in Europe (excluding Russia) amounted to $133 billion in 2023, marginally up by 0.2% at an annualized pace.

The report highlighted that European companies produce advanced weapon systems and were primarily focused on fulfilling older contracts in 2023, meaning their revenues did not capture the recent surge in new orders.

“Complex weapon systems have longer lead times,” explained Scarazzato, adding that companies that manufacture them are slower to adapt to shifts in demand, which is why their revenues remained relatively low in 2023 despite an increase in new orders.

European arms producers in Germany, Sweden, Ukraine, Poland, Norway, and Czechia saw significant revenue growth, fueled by the demand arising from the war in Ukraine, particularly for ammunition, artillery, air defense, and land systems.

The two Russian companies listed in the Top 100 saw their revenues jump 40% to $25.5 billion.

This growth was primarily driven by a 49% increase in arms revenues from Rostec, a state-owned firm overseeing numerous arms producers, including seven previously listed in the Top 100, for which individual revenue data was unavailable.

“Official data on Russian arms production is scarce and questionable, but most analysts believe that the production of new military equipment increased substantially in 2023, while Russia’s existing arsenal underwent extensive refurbishment and modernization,” said Tian, adding: “In particular, combat aircraft, helicopters, UAVs, tanks, munitions, and missiles are all thought to have been produced in greater numbers as Russia continued its offensive in Ukraine.”

The figure for 23 companies from Asia and Oceania listed in the ranking grew 5.7% to $136 billion.

The four South Korea-based companies posted a 39% surge in arms revenues to reach $11 billion, while the five Japan-based companies saw a 35% hike to $10 billion.

Since 2022, Japan’s policy of military expansion has led to a boom in domestic orders, with some companies experiencing a more than 300% increase in the value of new contracts, the report said.

“The sharp growth in arms revenues among South Korean and Japanese companies reflects the bigger picture of military build-ups taking place in the region in response to heightened threat perceptions,” said Xiao Liang, a researcher with the SIPRI Military Expenditure and Arms Production Program.

Six companies in the Top 100 are based in the Middle East, with their combined arms revenues rising by 18% to $19.6 billion.

Following the onset of the war in Gaza, the three Israeli companies in the Top 100 saw their revenues reach $13.6 billion, marking the highest figure ever recorded for Israeli firms in the SIPRI Top 100.

The three Turkish companies in the Top 100 recorded a 24% increase in revenues, totaling $6 billion, driven by exports linked to the war in Ukraine and Ankara’s ongoing push for greater self-reliance in arms production.

“In particular, as well as taking in record arms revenues in 2023, Israeli arms producers are booking many more orders as the war in Gaza rages on and spreads.

“The biggest Middle Eastern arms producers in the Top 100 saw their arms revenues reach unprecedented heights in 2023, and the growth looks set to continue,” said Diego Lopes da Silva, senior researcher with the SIPRI Military Expenditure and Arms Production Program.

Türkiye’s Baykar produces armed drones (UAVs) that have been extensively used in the war in Ukraine. In 2023, the company’s arms revenues soared by 25% to $1.9 billion, with exports making up approximately 90% of this total.

-Source: AA

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