Revenue of Global Arms Manufacturers Sets New Record 0 54

According to the results of 2024, the revenue of the 100 largest defense companies in the world from arms sales and military services grew by 5.9%, reaching a record $679 billion, as stated in a new report by the Stockholm International Peace Research Institute (SIPRI), published on Monday, December 1.

Since 2015, military revenue of companies in the SIPRI ranking has increased by 26%. The authors of the study attribute the growth to Russia's wars against Ukraine and Israel's conflict with the Palestinian radical Islamist movement Hamas, which is recognized as a terrorist organization in the European Union, the United Kingdom, and the United States.

Although the main contribution to global growth came from manufacturers in Europe and the United States, the trend was observed in all regions, and the revenue of Russian companies in the ranking grew at double-digit rates despite sanctions. "Last year, global revenue from arms reached the highest level in the history of SIPRI observations: manufacturers took advantage of high demand," noted Lorenzo Scarazzato, a researcher in the military spending and arms production program.

Russia Compensated for Export with Domestic Demand

Among Russian arms manufacturers, only two companies have been included in the SIPRI ranking for the last three years due to a lack of data: the state corporation Rostec ranks seventh, while the United Shipbuilding Corporation (USC) ranks 41st. Rostec now includes seven companies that were previously considered separately: "High-Precision Systems," "Concern Radioelectronic Technologies," "Rosel," "Russian Helicopters," "United Aircraft Corporation," "United Engine Corporation," and "Uralvagonzavod."

In 2024, losses for Rostec and USC from declining exports were fully compensated by domestic demand, SIPRI writes. Their combined revenue grew by 23% to $31.2 billion: Rostec's revenue increased by 26% to $27.1 billion, while USC's grew by 6.5% to $4.1 billion.

Since the beginning of the invasion of Ukraine in 2022, Russian arms production has remained at a high level, especially in the segments of ammunition, armored vehicles, artillery systems, missiles, and unmanned aerial vehicles (UAVs), analysts report. For example, the production of 152-mm artillery shells increased more than fourfold from 250,000 in 2022 to 1.3 million in 2024. The production of Iskander missiles increased from 250 in 2023 to 700 in 2024.

Russian Production More Resilient Than Expected

Despite this growth, SIPRI analysts assert that in sectors such as aerospace, Russia has faced supply shortages due to sanctions, as production still heavily relies on foreign components. Another challenge mentioned by the authors of the report is the labor shortage, which persists despite large-scale recruitment campaigns. "The Russian military industry does not have enough qualified labor to maintain the projected production rates necessary to achieve Russia's military goals," the authors of the report claim.

However, expectations that the Russian economy would struggle due to the war and sanctions have not materialized, says DW, one of the authors of the SIPRI report, Nan Tian.

"Russia is in a much worse position than it would be without the invasion, but it has proven to be more resilient than many thought," he explains.

According to him, Moscow has completely reshaped its priorities, and over the past three years, the Russian economy has transformed into a military one. The scale of militarization is so great that even in the event of a prolonged peace, it will be extremely difficult for the Kremlin to return the economy to a non-military state, predicts the analyst.

The only Ukrainian company in the top 100 is the state-owned "Ukrainian Defense Industry" (52nd place), which increased its revenue from arms sales by 41% to $3 billion.

German Companies Among Global Leaders

Arms manufacturers from Germany showed one of the most significant revenue growths in 2024 - by 36%. The only faster growth was recorded in Japan (40%). Four German companies made it into the global top 100, with Rheinmetall leading the way - with military sales revenue of €8.2 billion (up 47% year-on-year), it ranked 20th overall. The concern also became one of the global leaders in revenue growth, surpassed only outside Germany by the Czech Czechoslovak Group (up 193%) and American SpaceX (103%).

The leader in revenue growth among German arms manufacturers was Diehl Group, which recorded a 53% increase in military revenue to $2.1 billion (67th place in the global ranking). The war in Ukraine continued to stimulate demand for the concern's equipment, including through the supply of components for air defense systems. Additionally, Diehl received a record order for 155 mm artillery shells in its history.

Two more companies from Germany in the top 100 are Thyssenkrupp (military revenue growth of 12% to $2.3 billion) and Hensoldt (up 18% to $2.2 billion). The revenue growth of German manufacturers is "almost entirely related to the Russian invasion of Ukraine," explained DW, one of the authors of the SIPRI report, Nan Tian. According to him, demand from the Bundeswehr for tanks, armored personnel carriers, and ammunition to bolster its own stocks and replenish what Germany sent to Ukraine, as well as purchases by third countries, has increased.

The USA Maintains Leadership, Europe Grows

The leading arms manufacturers in the SIPRI ranking remain companies from the United States. There are 39 American manufacturers in the top 100 list. Their revenue related to military contracts grew by 3.8%, reaching $334 billion - this is half of the total global revenue of companies in the ranking. The largest American and global players are Lockheed Martin Corp, RTX, and Northrop Grumman Corp.

As researchers note, a challenge for the United States remains significant delays and budget overruns that hinder key Pentagon programs: new developments of the F-35 fighter, Columbia-class submarines, and the Sentinel intercontinental ballistic missile. "Delays and rising costs will inevitably affect U.S. military planning and spending," predicts one of the authors of the SIPRI report, Xiao Liang.

The 26 European companies in the ranking accounted for 22% of the total SIPRI global revenue. Over the year, this figure grew by 13% to $151 billion, securing European manufacturers second place after the United States. This was largely due to seven manufacturers from the United Kingdom, whose revenue grew by 6.6% to $52.2 billion. British BAE Systems became the fourth largest arms company in the world - for the first time since 2017, a manufacturer outside the United States made it into the top five.

Decline in Revenue in China Due to Corruption

Notably, despite the global trend of growth, in Asia and Oceania, the total revenue of companies from military production decreased by 1.2% to $130 billion. However, this decline is almost entirely due to a record 10% drop in revenue from arms sales of eight Chinese companies, SIPRI explains.

"This is not about a decrease in conflict. Recently, there have been numerous corruption scandals in China's defense industry, leading to cancellations and delays of major contracts," explained DW's Nan Tian from SIPRI.

For the first time, nine manufacturers from the Middle East also entered the top 100 ranking of the largest arms producers. Revenue from arms sales in the region grew by 14%. The growth was driven by manufacturers from Israel (up 16% to $16.2 billion), Turkey (up 11% to $10.1 billion), and a new entrant to the list, EDGE Group from the UAE ($4.7 billion).