Not just Lockheed Martin and Raytheon, here’s how Chinese defense companies are also sprinting
What emerges from Defense News' Top 100 Defense Companies 2024, the analysis that identifies and ranks the 100 largest armaments companies in the world
If the American Lockheed Martin dominates the global ranking of defense companies, the Chinese Avic ranks immediately after.
This is what emerges from the annual ranking drawn up by Defense News which each year lists the main defense contractors for its Top 100 list, collecting and adding information on company revenues from companies, earnings reports, analysts and other research.
US-based mega-companies, such as Lockheed Martin, RTX, Northrop Grumman, General Dynamics and Boeing, remain some of the largest defense companies in the world, as reflected in this year's ranking. But there are signs that non-US companies are playing more important roles in the sector, reports the American specialized newspaper-
For example, Aviation Industry Corp. of China (Avic) is now ranked as the second largest defense company in the world, behind only the maker of the F-35 fighter jet. The Asian company saw its defense revenue increase 45% from fiscal 2022 to fiscal 2023.
Our country is present in the ranking with the national defense giants Leonardo (dropped to 14th position from 11th last year) and Fincantieri (stable in 48th place).
All the details.
MILITARY BUDGETS INCREASE
First, Defense News notes that more than three-quarters of the companies on this year's Top 100 list have seen their defense revenues increase. The latest growth, 13%, occurs in the midst of the war between Russia and Ukraine; the escalation of conflict in the Middle East and high tension in the Asia-Pacific region around Taiwan.
In response to these events, governments around the world are spending more on defense, which in turn increases industry earnings.
Growing defense revenues among Asian and European companies likely reflect “a better understanding of security challenges in the global environment,” Cynthia Cook, who heads a defense industry research team at the think tank Center, told Defense News for Strategic and International Studies (Csis). In particular, Russia's invasion of Ukraine has pushed NATO members to spend more on military efforts. In 2023, global defense spending increased 9% to a record $2.2 trillion and “will increase again in 2024 as the world enters a period of heightened danger” according to “The Military Balance,” the annual report on military capabilities and the defense sector on a global scale drawn up by the International Institute for Strategic Studies (IISS).
THE SUBDIVISION OF THE DEFENSE MARKET BY REGION
Over the past five years, the share of global defense revenue from Asia-based companies (including those in Russia) that made the Top 100 has fluctuated, but has increased from 16% to 21% since the year's list last to this latest version, notes Defense News .
The share of U.S.-based companies has also fluctuated over the past five years, but has fallen from 59% to 54% since last year's list. For companies based in Europe, including Turkey and Ukraine, defense's share of revenue has not changed much over the past five years. In FY23, they occupied 21% of the world share.
US DEFENSE COMPANIES LOCKHEED MARTIN, TX AND NORTHROP GRUMMAN LEAD THE RANKING
Turning now to the Top 100 list compiled by Defense News for the current year, it emerges that US-based companies dominated the ranking with 48 positions, followed by: China and the United Kingdom, each with six. Germany and Türkiye, each with five while Israel and South Korea, each with three. India, Italy, Norway and Spain, each with two. Australia, Canada, Finland, Ireland, Luxembourg, Poland, Saudi Arabia, Singapore, Sweden and Ukraine, each with one.
Alone, France has four lists and the Netherlands one. It should be noted that Airbus has its “head office” in France and its “headquarters” in the Netherlands. Again, there are no Russian companies because they did not respond to requests for data information.
THE SPRINT OF CHINESE DEFENSE COMPANIES
The seven Chinese state-owned enterprises included in the Defense News Top 100 posted mixed results in 2023. The two largest companies performed well, with double-digit growth in defense-related revenues between 2022 and 2023. Two other companies reported maintained constant revenue growth; However, of the remaining three, two in the aerospace and land sectors reported a drop in profits and another failed to report any results, the newspaper said.
Overall, companies have sought to deepen their investments in innovation, and some have benefited from stronger market demand in the civilian sector and the People's Liberation Army's ongoing modernization developments.
DOUBLE DIGIT GROWTH IN TURNOVER
Between 2022 and 2023, AVIC's revenues related to defense production increased 52.6% (45% in US dollars, given the weaker yuan). The Chinese company thus ranks second in this year's ranking of the top 100 defense companies, behind Lockheed Martin.
The company's strong growth in 2023 is tied to its key subsidiaries, Chengdu Aircraft Industrial Group Co. Ltd., Xi'an Aircraft Industry Group Company Ltd. and Shenyang Aircraft Company Ltd., which exceeded targets in their annual guidance of batch production and delivery.
Ranking second in this year's ranking of Chinese enterprises, China State Shipbuilding Corporation Ltd. Group's defense-related revenues grew 25.7% year-on-year (19% in US dollars). The group's results represented the strongest year-on-year growth since the merger of China's two largest shipbuilding conglomerates in 2018 and reflect the continued strength of China's shipbuilding sector within the global market. In particular, the company refers to the growing demand for orders of “green” ships in the civil shipbuilding sector.
In addition to strong demand, CSSC reports that it has benefited from “relatively friendly” global market improvements, such as ship and steel prices, as well as exchange rates.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/non-solo-lockheed-martin-e-raytheon-ecco-come-sprintano-anche-le-aziende-cinesi-della-difesa/ on Thu, 08 Aug 2024 09:06:16 +0000.