European defence companies cash in on rising military budgets

This article was originally published in English

The biggest ones European defence and aeronautics companies record levels of orders and turnover as new arms orders from international governments soar.

These include Germany’s Rheinmetall, Britain’s BAE Systems, France’s Thales and Sweden’s Saab. The increase in orders is mainly explained by the growing demand for geopolitical uncertaintydue to the war between Russia and Ukraine and the conflict between Israel and Hamas.

As a result, military budgets Governments have increased, which has translated into more orders for defense contractors. By 2024, the European Defence Agency The European Commission has set aside an overall budget of more than 48 billion euros. With this additional money, companies are spending more on share buybacks and dividends, and analysts predict more mergers and acquisitions in the future.

Thales increases its orders by 26%

The French electrical and defense systems company Thales has just announced a 26% increase in its order book for the first half of the year, amounting to 10.8 billion euros. The company’s order book thus reached a new record of 47 billion euros.

The Earnings before interest and taxes (EBIT) increased by 10.4% to €1.096 billion in the first half of 2024, while sales also soared by 8.9% to €9.5 billion.

Rheinmetall announces major order from NATO customer

At the beginning of May this year, the German arms manufacturer Rheinmetall also announced that a client of theNATO had placed a large order of several tens of thousands of artillery shells. It will be delivered between this year and 2028, and also includes several hundred thousand propellant charge modules, used in various weapons.

In the second quarter of the year, the company’s order book amounted to almost 300 million euros. The company has mainly recorded an increase in orders due to several armed forces are replacing their ammunition stocks as the war between Russia and Ukraine continues.

BAE Systems raises sales forecasts on rising orders

The British aerospace and defence company BAE Systems is another company that is benefiting from the increase in orders. The company has just raised its sales forecasts as it presents its half-year results.

The Orders increased by 1.6 billion pounds (1.89 billion euros) during the first half of the year, to a total of 59.6 billion pounds (70.34 billion euros) as of June 30.

BAE Systems now estimates that the sales growth will be between 12% and 14% for the full year 2024, compared with the previously reported forecast of 10% to 12%. This is due to the strong results being recorded in all its divisions.

BAE Systems has also raised its profit forecasts underlying earnings before interest and tax (EBIT) in the range of 12% to 14%, compared with 11% to 13% previously. The company recorded sales growth of 13% in the first half of the year, reaching around £13.4 million (€15.82 billion).

BAE Systems chief executive Charles Woodburn said in the company’s half-year results report: “Our order intake demonstrates that demand for our products and services remains high and that we are well positioned for a sustained growth in the coming years.”

“We will continue investing in new technologiesfacilities and our staff to be able to fulfill our record order portfolio and help our government clients to stay ahead in an uncertain world,” he explained.

Saab secures €35 million order for combat boats

The Swedish defense company Saab also recently announced that it had received an order for 10 naval combat boats from the Swedish Defence Material AdministrationThe order amounts to 400 million Swedish krona or SEK (35.04 million euros), and the contract will start this year. Deliveries will take place continuously over the next few years.

The purchase symbolizes Sweden’s redoubled efforts to strengthen its naval defensesespecially given the uncertain geopolitical climate in Europe.

Saab President and CEO Micael Johansson said in the company’s second quarter results press release: “In the quarter, Saab recorded a strong order intake of SEK 40 billion (EUR 3.51 billion), the highest second quarter in the company’s history. Our portfolio is uniquely positioned and we are looking to expand our business.” strengthening our presence in the market”.

“We also continue to increase our investments in additional capacity and are fully focused on ensuring competencies and increase our workforce,” he added.

The company’s sales rose 22% in the second quarter of the year, driven by continued growth across all divisions. Earnings before interest and taxes also rose 25%. Other major American defense companies as Lockheed Martin, Northrop Grumman, General Dynamics and RTX are also benefit of this increase in orders from governments.