Ukraine war orders boost revenue for big US defence contractors, Israel-Gaza drives up demand
- New contracts to supply Ukraine directly were signed late last year, and now revenue is flowing to the big US defence companies
- Lockheed, General Dynamics and RTX all report surge for orders and expect Ukraine and Israel-Gaza wars to drive 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.
“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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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.
