How War Is Fueling Profits For The World's Biggest Arms Dealers

The expansion of regional wars in both Ukraine and the Middle East over the last year has captured news headlines around the world. These bitter conflicts have also fueled more weapons sales and driven profits for the world's biggest arms dealer, Lockheed Martin, and other major arms producing companies around the world. Lockheed Martin had revenues of $39.6 billion last year alone. The combined weapons sales revenues for the top five largest weapons sellers in the world (all American) including RTX Corporation, Northrop Grumman Corporation, Boeing, and General Dynamics Corporation amounted to $316.8 billion, up 2%, according to the SIPRI (Stockholm International Peace Research Institute) chart. The largest international arms dealer outside the United States, Britain's BAE Systems, raked in $26.9 billion.

Two main boiling conflagrations have driven arms sales globally. The seemingly never-ending war in Ukraine raged on, fueling weapons sales in both Europe and Russia. Meanwhile Israel's wars against Hamas and Hezbollah have boosted Israeli weapons makers to sales levels never before seen in either company's history. The weapons sales among the combined 100 leading global arms producing firms rose 4.2% and reached $632 billion for 2023 per new data from the SIPRI. U.S. markets are impacted by these conflicts, and the VIX volatility index gives insight into market direction.

Though weapons revenues grew across all regions of the globe, the sharpest increases were for companies located in Russia and the Middle East. Russian firms engaged in supplying the Kremlin's war against Ukraine saw a dramatic 40% revenue increase. Meanwhile, on the other side of the conflict, Ukraine's military spending rose an impressive 68.7%, according to Barron's.

Dr. Nan Tian, with the SIPRI, explained that, "Russia's existing arsenal underwent extensive refurbishment and modernization. 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."

Meanwhile many European weapons producers enjoyed substantial arms sales growth as they supplied the Ukrainian side of the war with land and air defense systems, artillery, and ammunition. Companies in Germany, Sweden, Poland, Norway, Ukraine, and Czechia benefitted from the strong Ukrainian demand. Turkey was also a big winner with its largest weapons manufacturers recording a 24% gain in sales from their exports related to the war in Ukraine as well as increased Turkish government spending. The ongoing and expanding war in Ukraine is a good reason why it is better to avoid timing the market.

Arms producers in the Middle East and especially Israel experienced substantial sales gains from the Gaza war against Hamas. The conflict in Gaza has boosted the arms revenues from the three Israeli weapons manufacturers (in the Top 100 weapons makers of the world) to $13.6 billion. It represented the largest numbers ever reported by the Israeli firms found in the SIPRI Top 100 list.

Senior Researcher Dr. Diego Lopes da Silva at the SIPRI Military Expenditure and Arms Production Program explained, "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. 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."

In more good news for weapons' makers, sales figures will only go up for 2024. According to researcher Lorenzo Scarazzato of 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." With all the conflicts raging in the world today showing no signs of abating, it is a good idea to know the secrets the wealthy use to protect and grow their fortune.