Starting from 2023, the total turnover of the first 100 weapons producers has returned to grow. In 2023 many arms manufacturers have, in fact, increased production in response to the increase in demand. Almost three quarters of the companies have increased their revenues deriving from the weapon sector on an annual basis. According to the last report of the Stockholm International Peace Research Institute (Sipri), the revenues deriving from the sale of weapons and military services by the 100 major companies in the sector reached 632 billion dollars in 2023, with a real increase of 4.2% compared to 2022 Russia and the Middle East. Overall, the smaller producers have been more efficient in responding to the new demand linked to wars in Gaza and Ukraine, the growing tensions in Eastern Asia and the rearmament programs elsewhere.
The global scenario of the war industry
In detail, the 41 companies in the top 100 based in the United States recorded a turnover resulting from the armaments sector of 317 billion dollars, half of the total turnover of the top 100 and 2.5% more than 2022. The total turnover of the armaments sector of the 27 main companies based in Europe (excluding Russia) has reached 133 billion dollars in 2023. Compared to 2022, the most contained increase between all regions of the world.
However, behind low growth, the picture is more nuanced. The European companies producing complex weapon systems have mainly worked on contracts more dated in 2023 and, consequently, their annual revenues do not reflect the influx of orders. At the same time, several other European producers have seen their revenues from the armaments sector grow substantially, driven by the demand linked to the war in Ukraine, in particular for ammunition, artillery and air defense systems. In particular, companies in Germany, Sweden, Ukraine, Poland, Norway and the Czech Republic have managed to satisfy this question.
The German Rheinmetall has increased the production capacity of 155 mm ammunition and its revenues have increased thanks to the deliveries of its leopard tanks and new orders, also through programs of “exchange of weapons” related to war (according to which the countries provide military materials to Ukraine and receive spare parts from the allies).
Six of the first 100 weapons manufacturers were based in the Middle East. Their overall revenues grew by 18%, reaching 19.6 billion dollars. With the outbreak of the war in Gaza, the revenues of the three companies based in Israel in the top 100 reached $ 13.6 billion. This is the highest figure ever recorded by Israeli companies in the top 100 of the Sipri.
The three companies based in Turkey saw their revenues grow by 24%, reaching 6 billion dollars, benefiting from exports stimulated by the war in Ukraine and the continuous thrust of the Turkish government towards self -sufficiency in the production of weapons.
The 23 companies in the top 100 based in Asia and Oceania recorded a growth in turnover of 5.7% in the armaments sector on an annual basis, reaching 136 billion dollars.
The four companies based in South Korea have recorded a total increase of 39% of turnover in the armament sector, reaching $ 11 billion.
The five companies based in Japan saw their overall revenues in the armaments sector increase by 35%, reaching 10 billion dollars. A military strengthening policy in Japan since 2022 has generated a wave of national orders, with some companies that have seen the value of new orders increase by over 300%.
Investing in the war industry
The defense and war industry is generally seen as a safe investment, especially in periods of geopolitical uncertainty, since governments continue massively to invest in arms and defense for national security reasons. During events such as conflicts or increases in international tensions, the actions of these companies can see significant growth.
But, although the defense and war industry – in periods, like this, of geopolitical uncertainty in which governments continue massively to invest in weapons and defense – can be seen as a safe investment, the war industry is not immune to risks. There is the regulation factor, then you have to take into account possible disputes.
To invest in actions of companies that produce weapons, the defense and war industry there are several options. The first is the direct purchase of actions through online broker or banks. The best -known defense companies are listed on Nyse and Euronext. There are, then, ETF (Exchange Traded Funds) that include companies in the defense sector, such as the ETF Ishares Us Aerospace & Defense. Finally, even if many ethical funds tend to exclude them, some pension funds include defense companies.
The listing of actions
The titles of the defense sector companies can be influenced positively or negative by several factors. The first is represented by government contracts. “The main customers of these companies – reads the analysis – are governments. The signature of billionaire contracts, such as those with the Pentagon, can significantly grow the value of the actions”. Then there are the geopolitical tensions that can bring the value of the actions rise. Finally, the aspect of technological innovation is not to be overlooked: the introduction of new technologies, such as advanced drones or missile systems, can, in fact, improve the competitiveness of companies and, therefore, their value on the stock exchange.
