The Russian invasion of Ukraine and the Israeli-Gaza conflict drove up military expenditure, which in turn boosted earnings for British weapons producer BAE Systems last year, and they anticipate this pattern to continue in 2024.
In 2023, the firm had record revenues of £25.3 billion ($31.9 billion) and produced underlying profits before interest and tax of £2.7 billion ($3.4 billion), as reported by The Guardian.
BAE Systems' signs are pictured at the company's factory near Rochester, southeast England, on November 10, 2023.
Amid Geopolitical Tensions
In the two years after Russia's full-scale invasion of Ukraine in February 2022, governments reevaluated their intentions for military expenditure, leading to a boom in shares of weapons manufacturers.
Tensions have also been rising in the Middle East since October 7 of last year, when the militant group Hamas, which controls Gaza, launched a surprise attack on Israel, killing many people. In response, Israel has been bombing Gaza for months, resulting in the deaths of approximately 30,000 Palestinians.
Bombs, ammunition, tanks, ships, fighter planes, and nuclear submarines are all part of BAE Systems' extensive product line.
In an interview, BAE CEO Charles Woodburn predicted "sustained growth in the coming years" for the weapons company. "Instability in Europe, the Middle East and other parts of the world brings into sharp focus the vital role that we play in protecting national security."
See Also: Prince William Weighs In on Israel-Hamas War: 'Too Many Have Been Killed'
More Sales Anticipated
On Wednesday morning, February 21, BAE's share price fell almost 3% due to somewhat lower-than-expected margins. Nonetheless, the firm is still at record highs, and its market value is about £38 billion ($48 billion). The value of its shares has increased by more than 100% since February 2022.
Sales were projected to increase by 10% to 12% in 2024, according to the company.
A new fighter plane developed by Italy, Japan, and the United Kingdom as part of the global combat air program and the Aukus accord, which included the United States, Britain, and Australia in the construction of nuclear-powered attack submarines, respectively, bolstered its long-term order book last year.
BAE said the significance of autonomous technology has been brought to light by the conflict in Ukraine, which has emphasized the necessity for munitions and the maintenance of legacy capabilities.
