Have European arms companies increased their profits due to wars?

Companies producing arms and military services increased their profits across the world by 4.2%, reaching profits of €598 billion in 2023, according to an analysis by the Stockholm International Peace Institute (SIPRI).

In Europe, arms companies’ profits increased by 0.2%, a relatively smaller regional increase that doesn’t accurately reflect an increase in orders and demand, according to the study.

The top arms companies that held their spot in the top 100 are pan-European company Airbus, Leonardo in Italy, Thales in France, Rolls Royce in the UK and Rheinmetall in Germany.

Airbus, a company best known for producing aeroplanes, saw profits from arms make up 18% of its total revenue in 2023. The Franco-German company is headquartered in France, and its weapons have been linked to the conflict in Yemen as well as surveillance projects against migrants trying to enter Europe through Mediterranean countries.

In 2018, Airbus signed a $600 million (€570m) deal with Israel Aerospace Industries as part of an ongoing collaboration between the two countries in drone warfare, allowing Heron TP drones to be leased to the German Ministry of Defence.

German arms companies saw their revenues increase substantially, largely as a result of demand linked to the war in Ukraine. Rheinmetall, a company headquarted in Dusseldorf, increased its profits by 10%, due to its production of 155-mm ammunition and deliveries of its Leopard tanks to Kyiv.

Higher profits

The profits from these companies are likely larger than the data shows, says Lorenzo Scarazzato, a researcher for SIPRI.

Smaller companies in Sweden, Ukraine, Poland, Norway and Czechia received a huge uptick in orders, launched recruitment drives and increased their profits significantly, indicating a general increase of demand not yet reflected in profits from bigger players.

“We will see in the coming years that this is just the beginning, because we have seen how the smaller players have been involved in increasing revenues, in this global growth. But the biggest players are not yet reflecting these demands,” Scarazzato said.

“Once these larger companies, both in Europe and in the US, create these demands, we will see a significant upswing”.

Turkish companies also saw a large increase, due in part to the country’s aims of becoming self-reliant in arms production but also due to exports linked to the war in Ukraine. Turkish-owned company Baykar, which produces armed UAVs widely used in Ukraine, saw its profits increase by 25% to reach $1.9 billion (€1.8bn).

Elsewhere, SIPRI’s analysis shows that all arms companies focused on modernising their nuclear weapons, with nuclear development being an important source of profit for arms production companies.

In the UK, the Atomic Weapons Establishment, which designs, manufactures and maintains nuclear warheads, recorded the largest percentage increase in profit out of all British companies in the top 100, reaching $2.2 billion (€2bn).