The largest Western military and defense corporations have experienced a surge in revenues due to orders linked to the Ukraine conflict, according to third-quarter earnings released this week. The increase in military spending by Western countries to supply weapons to Ukraine and rearm their own militaries has contributed to this spike in revenues.
Lockheed Martin, General Dynamics, and RTX all reported better than expected results and anticipate higher revenues in the upcoming quarters. Lockheed Martin’s third-quarter results exceeded expectations, and the company’s backlog remained strong at $156 billion due to robust domestic and international orders. Net earnings for the past nine months amounted to approximately $5 billion, compared to $3.8 billion in the same period last year.
General Dynamics saw a significant increase in revenues for its combat systems branch in the third quarter, particularly in the production of armored vehicles, tanks, and artillery sent to Ukraine. The company’s chief financial officer highlighted the pressure to support the US Army customer in supplying artillery for Ukraine.
Boeing’s Defense, Space & Security unit also recorded a 3% increase in revenue for the quarter, totaling $5.5 billion. The company has supplied Ukraine with various armaments, including unmanned aerial vehicles and missiles, in addition to delivering the first T-7A Red Hawk jet to the US Air Force.
RTX reported a 12% rise in adjusted revenue for the third quarter and disclosed receiving $3 billion worth of orders since the start of Russia’s military operation in Ukraine in February 2022. The company expects further orders in the near future.
Northrop Grumman’s defense systems unit experienced 6% higher earnings driven by the demand for ammunition and rocket motors used in guided multiple-launch rocket systems.
Saab, a Swedish aircraft manufacturer, raised its sales outlook for the year due to high demand. Rheinmetall, a German company, anticipates operating profit to surpass estimates by 15% and amount to approximately $202 million, attributing this to strong demand for weapons and ammunition.
The recent escalation of hostilities in Gaza also prompted defense contractors to expect a boost in orders, leading to a surge in their stocks.
Russian officials have criticized the supply of Western weapons to Ukraine, arguing that it exacerbates the conflict without deterring Russia from achieving its military objectives. Moscow views the conflict as a US-led proxy war against Russia, where Ukrainians are seen as “cannon fodder.”
However, the continued military aid to Ukraine has faced growing opposition among the populaces of Western countries. Polls conducted in recent months have shown a decrease in public support for spending money on arming Ukraine instead of addressing domestic challenges such as inflation and the cost-of-living crisis.
In summary, Western defense corporations have benefited from increased military spending to supply weapons to Ukraine and rearm domestic militaries. The surge in revenues for companies like Lockheed Martin, General Dynamics, and RTX is expected to continue in the upcoming quarters. However, the supply of Western weapons to Ukraine and the ongoing conflict have faced criticism from Russian officials and declining public support in Western countries.