Shares of European military armaments companies have risen since the start of the Ukraine war, but given the growing order records, there is still room for more.
Being the largest military supplier in the country that spends the most on armaments (USA) is an important title, but for Lockheed Martin shareholders this is not enough. With a market capitalization of more than 120 billion euros, the shares of this American company have risen by 26% since the beginning of the war in Ukraine.
On the battle front, to defend the positions of the Ukrainian army, there are hundreds of anti-tank missiles. spearwhich became a symbol of Ukrainian resistance and several highly mobile artillery systems (Hemars) shipped from the United States. All owned by Lockheed Martin.
The North American armaments giant is just one of the companies that has seen its business grow as fast as the war in Europe is developing, largely due to the $100 billion and more than $40 billion aid package from NATO countries to arm the Ukrainian military against military forces. for the Russian Federation.
Among the European companies, the star of the battalion was the German group Rheinmetall, which produces battle tanks Marder And the famous tank Leopard 2 – a repeated request of Volodymyr Zelensky to his allies. According to official data, NATO countries have already sent 12 of these tanks to Ukraine – and Portugal is going to send three.
Source: Reuters. Equity development in your local currency. European equities as measured by the performance of the Euro Stoxx 50 Index and global equities as measured by the MSCI World Index.
The company’s shares, led by Armin Papperger, rose 158% in a year, compared to a 5.8% rise in the main German stock index (DAX) or a 10.8% rise (including dividends). Euro Stoxx 50.
Recently, at interview the magazine strictArmin Papperger, CEO of Rheinmetall, predicting that the company’s business is just getting started, predicts an equally strong two years to 2022, with sales rising to 12 billion euros by 2025, about a billion above the previously set target.
In that interview, the head of the German company stated that Rheinmetall’s order book was 30 billion euros in December 2022, which is a record value compared to the 24.5 million euros at the end of 2021, and 33% less than the 40 billion euros it expects to end this year b.
The war in Ukraine saw the ups and downs of the stock market
War is the favorite stage for defense companies and the production of military weapons. During periods of military conflict, these companies see their business grow. The recent war in Afghanistan, which lasted nearly 20 years (between October 2001 and August 2022), is a case in point.
second mathematical calculations to I think thank you “The Cost of War,” by Brown University This conflict has cost the US Treasury more than €2 billion, resulting in billions in revenue for the coffers of the world’s largest arms manufacturers, which include subsidiaries of the US military-industrial complex. (CIMA): Lockheed Martin, Raytheon, General Dynamics, Boeing, and Northrop Grumman.
During the war in Afghanistan, the shares of the companies that make up CIMA rose, on average, 927%, about 1.8 times more than the shares of the 500 companies that make up the main US stock index (S&P 500).
The war in Ukraine is no exception to the rule. It was also a stage for expanding the business of many defense and military arms production companies. Stocks of CIMA companies, for example, have appreciated an average of 15% in the past year, compared to a decline of 4% for the S&P 500 in the same period.
The accounts of the main European defense and military armament companies show the backlog of orders for the coming years in record numbers.
The highlight Lockheed Martin shares have accumulated a 25.6% increase since February 24, 2022, but could continue to rise if NATO countries reach an agreement Sending some F-16 fighters to Ukraineas requested by Volodymyr Zelensky – aircraft produced by the American company.
However, in the war in Ukraine, European military companies benefited the most, as they accounted for the largest share of support packages for Ukraine. In addition to Germany’s Rheinmetall, the focus is on Swedish Saab shares, which have risen 173% since the outbreak of the war, following the success of its anti-tank missile system. NLAW; And for the titles of the Italian company Leonardo, which is responsible for the production of M1A1 tank defense systemThat jumped 66% last year.
His work is present and future
The opportune moment for European defense and military armament companies is not calculated only at the present time. BAE Systems, the UK’s largest arms manufacturer, Submitted on Thursday Profits amounted to 2.7 billion euros, and orders at the end of 2022 amounted to 67 billion euros, as a result of the increasing demand for weapons by several countries.
“While it is tragic that it took a war in Europe to raise awareness of the importance of defense around the world, BAE Systems is well placed to help governments keep their citizens safe in an environment of heightened threats,” said Charles Woodburn, CEO of BAE Systems. from the company while presenting the results, while also confirming that it expects sales to increase by between 3% and 5% for 2023.
Last year, shares of BAE Systems, which is listed on the London Stock Exchange, rose by 52% (already including dividend payments) compared to a rise of 9.8% for the shares of the 100 companies that make up the main British shareholder index (Footsie).
It shows a portfolio made a year ago on equal footing by the four major European military arms companies that made the biggest gains from the war in Ukraine (Rheinmetall, Saab, Leonardo and BAE Systems) with an average valuation of 111%.
The reference made by Charles Woodburn is not limited to BAE Systems accounts. Accounts of major European defense and military armament companies show an order book for the coming years in record numbers. Leonardo of Italy, for example, who will give accounts for March 9thAlready in September, an order book for the 37.4 billion euroswhich is equivalent to 2.5 years of production.
The same thing happens with Saab, which in addition to recording a 16% increase in sales in 2022, Achieve 21% growth in the order book to more than 12 billion euros and expects an organic increase of 15% in sales this year. “We have a solid order book and a strong position that enables us to achieve further growth,” said Mikael Johansson, President and CEO of Saab.
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