How US Defense Companies Profit from Ukraine War

Multiple major industries and international companies in Europe have been affected by the disruption of their respective supply chains and international sanctions on Russia, resulting in increased costs of doing business. However, one industry that stands out from the rest because it is poised to benefit the most from the war in Ukraine and the current instability in Europe is the Defense Industry.

The Impact on the Industry

Global Defense Companies, especially major US defense companies, are poised to benefit tremendously from the ongoing conflict in Ukraine. Since the war started, multiple countries in Europe, especially the neighboring countries of Russia, have expressed their concern and are now reevaluating their defense capabilities and are looking to beef up their defense posture, ultimately increasing demand for weaponry systems from Defense Companies, especially the considered “industry standard,” the US Defense Companies such as Lockheed Martin, Raytheon, and Boeing.

Defense companies are now piling up with orders from multiple European countries that aim to catch up on underspending on their Armed Forces before the war in Ukraine began. In addition, these efforts are to serve as a deterrent to current Russian aggression.

In Ukraine, countries all over the globe have supplied it with defensive armaments. However, almost three months into the war, it is running out of these supplies. Thus, Ukraine has been voicing a request to replenish its stockpile to continue its resistance.

Pentagon is Stepping-Up

According to the US Defense Department, “the Pentagon plans to use $3.5 billion earmarked for this purpose in a spending bill approved in mid-March” the statement was made after the US has pledged to supply Ukraine with defensive weapons.

These supplies include the battle-proven Javelin anti-tank missile, which is made by a joint venture between two US companies, Raytheon and Lockheed Martin. At the same time, Raytheon’s Stinger anti-aircraft missile is set to be produced after Pentagon ordered $340 million worth of these.

โ€œWe are exploring options to more quickly replenish US inventories and backfill depleted stocks of allies and partners,โ€ the US Defense Spokesman added. President Joe Biden has already proposed a four percent increase in the Pentagon budget moving forward, an additional potential profit for US defense companies.

The Future is Bright

Last year, Lockheed Martin and Raytheon registered revenue figures of $67 Billion and $64 Billion, respectively.

According to CFRA, an investment research firm, โ€œif 1,000 Stingers and 1,000 Javelins get shipped to Eastern Europe each month for the next year, which is not unlikely given the current pace, in our view, we think it would equate to $1 billion to $2 billion in revenue for both program manufacturers, which is material.โ€

Furthermore, Europe’s biggest economy, Germany, announced a historic major policy shift away from pacifism, saying it would immediately allocate 100 billion euros in an effort to catch up with its peers in terms of modern equipment. This is on top of its pledge to keep with the NATO standard of two percent GDP Defense allocation to its member countries. Part of Germany’s shopping list is F-35 fighter jets from Lockheed Martin. With all of these, Lockheed Martin’s CEO, James Taiclet, said that he is witnessing a “renewed great power competition,โ€ which ultimately could trigger higher military spending across western countries. While, Raytheonโ€™s CEO, Greg Hayes, said that “rising tensions in Asia, the Middle East, and Eastern Europe would lead to higher international sales โ€“ not right away but later in 2022 and beyond.”


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