New Delhi: The last two years have been good for US and UK-based aerospace and defence manufacturers as stock prices have grown, companies announced large-share buybacks and revenue shot up manifold with new orders placed after Washington’s new funding for Ukraine, Israel and the Indo-Pacific.
The four largest US-based firms, Lockheed Martin, RTX Corporation, Northrop Grumman, and General Dynamics, and the UK’s BAE Systems — which has a US subsidiary that manufactures the M777 ultra lightweight howitzers — have all posted strong financial returns after Russian troops entered Ukraine as part of its “special military operation” on 24 February, 2022.
On that day, the share price of Northrop Grumman on the New York Stock Exchange (NYSE: NOC) closed at $395.49 a share. On 23 April 2024, the company was trading at $474.68 a share on the NYSE, a 20.02 percent increase.
At its peak, the company’s share price was trading close to $550 a share in October 2022, a sign of the confidence of the market in it. The story is similar across the board.
RTX Corporation, formerly Raytheon Technologies, saw its share price grow from $94.25 in the NYSE (NYSE: RTX) on 24 February 2022 to $101.38 a share on 23 April 2024, a 7.56 percent increase in value.
Lockheed Martin’s share price grew 16.27 percent between 24 February 2022 and 23 April 2024, from $395.71 a share to $460.08 on the NYSE (NYSE: LMT). General Dynamics, another large defence manufacturer, saw its share price grow 33.94 percent during the same period — from $218.53 to $292.72 on the NYSE (NYSE:GD).
BAE Systems, on 25 February 2022, closed at 653 GBP a share on the London Stock Exchange (LON: BA). On 23 April 2024, its shares were trading at 1,340 GBP, a massive 105 percent increase over the two years of the Ukraine-Russia war.
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All of these companies produce large parts of the arsenal of weapons the US and its European allies have been transferring to Ukraine, to aid in its war efforts against Russia.
Strong financial returns
RTX Corporation, the manufacturers of the PATRIOT missile defence system, has won a new deal with Germany worth $1.2 billion in the last quarter for the aforementioned system.
Its organic sales grew by twelve percent year-on-year in the first quarter, as announced on 23 April 2024 during its first quarter shareholders earnings call. In the first quarter of 2024, the total value of sales stood at $19.3 billion. In the same quarter in 2023, its total sales stood at $17.2 billion.
The company’s defence sales grew by seven percent in the first quarter. This includes the previously-mentioned order by the German government, along with three GEM-T (Guidance Enhanced Missile) orders worth $1.7 billion. The total backlog of orders in its defence arm, Raytheon, stands at $53 billion.
Lockheed Martin’s Missiles and Fire Control division saw an increase of 25 percent in total sales value in its first quarter of 2024. Sales grew from $2.3 billion in the same quarter in 2023 to $2.9 billion this year. They also announced a ramp-up in production of guided multiple-launch rocket systems (GMLRS) and high mobility artillery rocket systems (HIMARS) to name a few.
Both GMLRS and HIMARS have been shipped by the US to Ukraine.
General Dynamics in its 2024 first quarter financial results announced that its defence segments had signed total orders worth $8.8 billion. Revenue for the combat systems divisions is up 20 percent in the first quarter of 2024 in comparison to the same period last year. Revenue touched $2.1 billion in the first quarter of 2024, while in the same quarter in 2023 it stood at $1.75 billion.
Notable awards in this quarter include a $1.3 billion order from Austria for the Pandur 6×6 armoured vehicles, that could potentially touch $2 billion according to the presentation made by General Dynamics during the shareholders earnings call Wednesday.
European countries have been investing billions of dollars in purchasing new defence equipment as the war in Ukraine has continued over the last two years. Austria for example will be purchasing 225 additional Pandurs from General Dynamics.
Northrop Grumman’s first quarter results are expected Thursday. The 2023 financial results saw it beat analysts’s expectations. The company projected $39 billion in revenues, while analysts estimated around $38.4 to $38.8 billion.
A large part of its increased revenues comes from the sales of ammunition and rocket motors used in guided multiple-launch rocket systems, which is being used by Ukraine to defend itself from Russian attacks, according to Reuters.
Share buybacks, dividends and Ukraine aid
Sales and stock prices are not the only markers of a thriving appetite for US made arms as a result of the Russia-Ukraine war. The companies have also been heavily buying back its shares, giving billions of dollars to its investors.
Northrop Grumman in 2023 returned over $2.6 billion in share buybacks and dividends to its investors. RTX Corporation repurchased $12.9 billion worth of shares in 2023. Lockheed returned over $3.8 billion to investors via share repurchases and dividends in 2023. General Dynamics announced dividends worth $1.4 billion and repurchased $434 million shares in 2023.
In the middle of the first quarter results being announced by various defence companies, President Joe Biden said the US would be sending Ukraine new equipment from its own stockpiles, and will replenish them built by American companies. The equipment includes Javelin anti-tank missiles, Patriot missiles and artillery shells — all produced by the aforementioned companies.
“In other words, we’re helping Ukraine while at the same time investing in our own industrial base, strengthening our own national security, and supporting jobs in nearly 40 states all across America,” Biden said.
(Edited by Tikli Basu)
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