Business

Ukraine war orders starting to boost revenues for big US defence contractors

They expect further increase in demand due to the situation in Israel

Published

7 months ago

October 28, 2023

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Ukraine war orders starting to boost revenues for big US defence contractors

The Russian invasion of Ukraine in 2022 is starting to boost defence contractors’ revenues, as customers such as the US government restock supplies shipped to Ukraine and countries around Europe arm themselves with an eye on Moscow’s aggressions.

US defence contractors such as Lockheed Martin, General Dynamics and others expect that existing orders for hundreds of thousands of artillery rounds, hundreds of Patriot missile interceptors and a surge in orders for armoured vehicles expected in the months ahead will underpin their results in coming quarters.

New contracts to supply Ukraine directly – or backfill US weapons sent to Ukraine – were signed late last year, and now revenue is flowing to the big defence contractors. Lockheed, General Dynamics and RTX all reported better than expected results over the past several days, and executives expect both the conflict in Ukraine and Israel’s war with Palestinian militant group Hamas to drive up near-term demand.

“We’ve gone from 14,000 (artillery) rounds per month to 20,000 very quickly. We’re working ahead of schedule to accelerate that production capacity up to 85,000, even as high as 100,000 rounds per month,” Jason Aiken, General Dynamics’ chief financial officer, said on a call with Wall Street analysts on Wednesday.

“And I think the Israel situation is only going to put upward pressure on that demand.”

The General Dynamics’ Combat Systems unit, which makes armoured vehicles, tanks and the artillery Ukraine uses, saw its revenue rise almost 25 per cent versus the same period a year ago.

RTX, which makes AMRAAM rockets used in Ukraine, said on Tuesday’s earnings call with Wall Street analysts it has received $3 billion of orders since Russia’s February 2022 invasion that are related to replenishing Ukraine and US war stocks, and the company expects more.

Third-quarter sales for Northrop Grumman’s Defense Systems segment rose 6pc on high demand for ammunition and rocket motors used in guided multiple-launch rocket systems (GMLRS), which play a crucial role in supporting Ukraine’s defence efforts against Russian forces.

This is part of a global trend. Sweden’s Saab raised its full-year sales outlook on Thursday on the back of strong defence demand and Germany’s Rheinmetall (RHMG.DE) said third-quarter profit jumped on strong demand for weapons and ammunition.

During his latest request for $106bn in new funds for Ukraine, Israel, the Indo-Pacific region and border enforcement, US President Joe Biden on Oct 20 said some of the supplemental request would go to companies that backfill production of US weapons sent abroad. Biden mentioned Patriot missiles made in Arizona, and “artillery shells manufactured in 12 states across the country,” naming Pennsylvania, Ohio and Texas.

To be sure, executives from several defence firms at a recent trade show cautioned that a lack of skilled labor and supply chain issues continue to hamper companies’ capacity to fill orders.

“The supply chain, to be completely candid with you, remains, and I think we expect to remain what I call fragile,” General Dynamics’s Aiken said on the earnings call, as the company said it was cutting its forecast for 2023 business jet deliveries. “I don’t think that’s going to get back to what we saw pre-pandemic for the foreseeable future.”

Lockheed on Oct 17 said supply and labor disruptions are affecting divisions like aeronautics, which makes the advanced F-35 fighter jet, due to the need for processor assemblies, solid-rocket motors, castings and forgings.

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Related Topics:Business Russian Ukraine Ukraine war Us

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Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

Published

2 days ago

May 17, 2024

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Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

A notable Chinese company has expressed keen interest in expanding its investment in Pakistan, in yet another sign of investor confidence boost in the leadership of Prime Minister Shehbaz Sharif.

A delegation from Chinese firm MCC Tongsin Resources led by its Chairman Wang Jaichen called on PM Shehbaz here on Friday.

The premier invited the Chinese company to invest in Pakistan’s mining sector and manufacturing of export goods.

Shehbaz assured the delegation that his government would extend all-out facilitation to the company from minerals exploration and processing to the export of goods.

The PM instructed the relevant federal ministers and officers to continue consultation with the Chinese firm, taking the Balochistan chief minister, provincial departments and stakeholders on board.

The delegates reposed trust in PM Shehbaz’s leadership, and expressed keen interest in enhancing their investment in Pakistan’s mining and minerals sectors.

The delegation briefed Prime Minister Shehbaz about the construction of a mineral park in Pakistan and their future investment plans.

The premier welcomed the Chinese firm and highlighted the priority steps by his government to promote foreign investment in Pakistan.

He said that being a time-tested friend, China supported Pakistan in every difficult hour for which the Pakistani nation was grateful to the leadership and people of China.

Federal ministers Ahad Khan Cheema, Dr Musaddik Malik, Rana Tanveer Hussain, Jam Kamal Khan and relevant senior officers attended the meeting.

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Business

Govt jacks up power price by Rs1.47 per unit

Published

2 days ago

May 17, 2024

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Govt jacks up power price by Rs1.47 per unit

The government on Friday increased the electricity tariff by Rs1.47 per unit.

According to Nepra sources, the collection from consumers will take place in August, September, and October.

The electricity companies had requested the funds as part of the third quarter adjustment for 2023-2024, seeking Rs 31.34 billion under capacity charges.

Sources said that Rs5.57 billion were requested for operation and maintenance costs, and Rs12.38 billion were requested for the transmission and distribution impact under monthly fuel cost adjustment.

Previously, Nepra had completed the hearing on the electricity companies’ request under the quarterly adjustment.

Nepra approved the Power Division’s request, allowing an increase of Rs 1.45 per unit in electricity prices.

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Business

Hong Kong allows China’s digital yuan to be used in local shops

Published

2 days ago

May 17, 2024

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Hong Kong allows China's digital yuan to be used in local shops

Hong Kong will allow mainland China’s pilot digital currency to be used in shops in the city, the head of its de facto central bank said on Friday, marking a step forward for Beijing’s efforts to internationalise the yuan amid rising geopolitical tensions.

The programme, backed by Beijing, will allow mainland Chinese and Hong Kong residents to open digital yuan wallets via a mobile app developed by China’s central bank and will permit them to make payments in retail shops and some online stores in Hong Kong and in mainland China.

Transactions using e-CNY, predominantly for domestic retail payments in China, hit 1.8 trillion yuan ($249.27 billion) as of end of June 2023, with 120 million digital wallets opened, according to the latest disclosure from China’s central bank.

Using the wallet, users can make payments at over 10 million merchants in 17 provinces and cities in the mainland.

Each wallet used in the city will be subject to a balance limit of 10,000 yuan, with single transactions and daily payments capped at 2,000 yuan and 5,000 yuan, respectively, officials from the Hong Kong Monetary Authority said.

Peer-to-peer transfers will not be allowed at the moment, according to the HKMA.

“By expanding the e-CNY pilot in Hong Kong .. users may now top up their wallets anytime, anywhere without having to open a mainland bank account, thereby facilitating merchant payments in the mainland by Hong Kong residents,” HKMA Chief Eddie Yue said.

Currently, users of other digital yuan wallets such as those operated by Ant Group and Tencent can make payments in the city.

Industrial and Commercial Bank of China, Bank of China Ltd, China Construction Bank Corp and Bank of Communications Co have been selected as e-CNY wallet operators.

The yuan’s use in global finance remains low, though it has shown steady increases.

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