New study - Despite the war in Ukraine: arms manufacturers' sales decline
Despite increased demand due to the war in Ukraine, the profits of the world's largest defense companies declined in 2022. Sales of weapons and military services by the 100 largest defense companies amounted to 597 billion dollars (around 549 billion euros) last year, according to a report published on Monday by the Stockholm International Peace Research Institute (Sipri). According to the report, turnover fell by 3.5 percent compared to 2021.
Decline in sales mainly among US arms manufacturers - also due to corona
Sipri researcher Diego Lopes da Silva told the AFP news agency that the figures were "unexpected" against the backdrop of geopolitical tensions and the Russian invasion of Ukraine. The decline shows "that there is a time lag between a demand shock like the war in Ukraine and the ability of companies to ramp up production and really meet demand," Lopes da Silva explained.
According to Sipri, the decline is largely due to lower profits at US companies, which have had to contend with "supply chain problems and labor shortages" in connection with the coronavirus pandemic. US sales fell by 7.9 percent, but still accounted for 51 percent of total profits in 2022. 42 of the 100 largest defense companies came from the US.
Russian defense industry awaits payments from the Kremlin
Russian defense companies saw their profits plummet by twelve percent to 20.8 billion dollars. According to Lopes da Silva, this was partly due to the Western sanctions and partly to the lack of payments from the Russian state. It was also more difficult to obtain data from Russia, which is why only two Russian companies were included.
According to Sipri, arms manufacturers in the Middle East, Asia and Oceania were able to react more quickly to the growing demand because the weapons systems manufactured there are less complicated than in the USA. Turkish arms companies in particular benefited from the high demand, especially the drone manufacturer Baykar, whose products are used in Ukraine.
The second largest arms manufacturer, China, was able to increase its revenue by 2.7 percent to 108 billion dollars.
According to Lopes da Silva, there is no sign of a decline in demand. "We have seen in the company reports that incoming orders and order backlogs are increasing strongly." Sipri therefore assumes that military spending will continue to rise and that the profits of defense companies will ultimately also increase.
Read also:
- The report published by Sipri mentioned a 3.5% decrease in sales of weapons and military services by the 100 largest defense companies in 2022, despite the ongoing war in Ukraine.
- The decline in sales was mainly attributed to the lower profits at US companies, which were impacted by supply chain problems and labor shortages due to the Coronavirus pandemic.
- According to Sipri, Turkish arms companies, like drone manufacturer Baykar, benefited from the high demand in the Middle East, Asia, and Oceania, with their products being used in Ukraine.
- Despite the fall in profits, Sipri researcher Diego Lopes da Silva expected military spending to continue rising, leading to an eventual increase in profits for defense companies, including those like AFP and the USA's defense contractors.
Source: www.stern.de
