Cameroon timber Ukraine war orders boost revenue for big US defence contractors, Israel-Gaza drives up demand
The Russian invasion of Ukraine in 2022 is starting to boost defence contractors’ revenues, as customers such as the US government restock supplies shipped to Ukraine and countries around Europe arm themselves with an eye on Moscow’s aggressions.
US defence contractors such as Lockheed Martin, General Dynamics and others expect that existing orders for hundreds of thousands of artillery rounds, hundreds of Patriot missile interceptors and a surge in orders for armoured vehicles expected in the months ahead will underpin their results in coming quarters.
New contracts to supply Ukraine directly – or backfill US weapons sent to Ukraine – were signed late last year, and now revenue is flowing to the big defence contractors. Lockheed, General Dynamics and RTX all reported better than expected results over the past several days, and executives expect both the conflict in Ukraine and Israel’s war with Palestinian militant group Hamas to drive up near-term demand.
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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,” Jason Aiken, General Dynamics’ chief financial officer, said.
“And I think the Israel situation is only going to put upwards pressure on that demand.”
The General Dynamics’ Combat Systems unit, which makes armoured vehicles, tanks and the artillery Ukraine uses, saw its revenue rise almost 25 per cent versus the same period a year ago.
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Ukraine says Russian strike killed over 50 in one of the deadliest attacks of the war
Ukraine says Russian strike killed over 50 in one of the deadliest attacks of the war
RTX, which makes AMRAAM rockets used in Ukraine, said it has received US$3 billion of orders since Russia’s February 2022 invasion that are related to replenishing Ukraine and US war stocks, and the company expects more.
Third-quarter sales for Northrop Grumman’s Defence Systems segment rose 6 per cent on high demand for ammunition and rocket motors used in guided multiple-launch rocket systems (GMLRS), which play a crucial role in supporting Ukraine’s defence efforts against Russian forces.
During his latest request for US$106 billion in new funds for Ukraine, Israel, the Indo-Pacific region and border enforcement, President Biden on October 20 said some of the supplemental request would go to companies that backfill production of US weapons sent abroad. Biden mentioned Patriot missiles made in Arizona, and “artillery shells manufactured in 12 states across the country,” naming Pennsylvania, Ohio and Texas.