In mid-December, the Stockholm Peace Research Institute (SIPRI) traditionally publishes its last major report of the year. On December 14, an updated version of the Top 100 rating of the largest manufacturers of weapons and military equipment was released, reflecting the state of the market in 2014. Swedish experts have collected all available data on the activities of several dozen defense industry companies from many countries and brought them together in a general rating. Let's consider a new report.
General trends
In a press release that traditionally accompanies the publication of the rating, the publishing organization notes the main market trends observed during the period under review. This time, SIPRI writes that 2014 was again marked by a reduction in the global arms market, which is why such trends persist for the fourth year in a row. In comparison with 2013, the decline was 1.5%, which allows us to consider it moderate. The 2014 cuts hit companies in North America and Western Europe the most. Organizations from other countries, in turn, have increased their revenues and market share.
SIPRI notes that companies from the United States continue to maintain their leading positions in the rankings. American companies account for 54.4% of the total sales of Top 100 firms. At the same time, US sales over the past year fell by 4.1%. A similar rate of decline was already observed several years ago, in 2012-13. Only one US company is showing growth. Lockheed Martin increased its performance by 3.9% to $ 37.5 billion, thanks to which it once again defended its right to first place. SIPRI analysts believe that this situation at the top of the rating will continue. Not so long ago, Lockheed Martin acquired Sikorsky Aircraft, which will only increase the lead over its pursuers.
The total volume of the world arms market in 2002-2014
In Western Europe, only Germany (9.4%) and Switzerland (11.2%) showed growth. In general, Western European sales fell by 7.4%. The success of the German and Swiss industry is associated with the growth of incomes of ThyssenKrupp (29.5%) and Pilatus Aircraft (24.6%).
Despite the economic troubles, the Russian defense industry continues to show revenue growth. Thanks to this, in particular, the number of Russian companies in the SIPRI Top 100 increased from 9 to 11. The list of Russian companies in the rating was replenished by the High-Precision Complexes holding and OAO RTI im. Mints. Some changes in the list of Russian companies are related to transformations. Thus, the Sozvezdie concern gave way to the United Instrument-Making Corporation, organized in 2014.
The best growth among Russian enterprises was shown by the Uralvagonzavod corporation, whose income on military contracts grew by a record 72.5%. The Almaz-Antey Air Defense Concern is also performing well with a 23% increase in revenues.
It is noted that the growth of revenues of the Russian defense industry is associated with an increase in government spending on defense and the emergence of new orders from third countries. As a result, in 2014 their sales increased by 48.4% compared to 2013. In terms of the income of its member companies, Russia is the undoubted world leader.
Also, in their press release, SIPRI specialists touched upon the topic of Ukrainian sales. In connection with the well-known events, the indicators of Ukrainian enterprises are falling. The company "Ukroboronprom" lost 50.2% of sales, which is why it fell from 58th to 90th place. Another Ukrainian company, Motor Sich, dropped out of the rating due to a drop in sales. The reason for these events is the armed conflict, the loss of the Russian market, as well as the problems of the national currency.
In 2013, SIPRI added the Emerging Producers category to its rankings, which aims to track the progress of countries that have yet to gain significant international market share. In 2014, Brazil, India, Turkey and South Korea were included in this category. The defense industry of these countries in 2014 earned 3.7% of the total revenues of the Top 100 companies, and their total income during this period increased by 5.1%.
Turkey included two companies in the new rating: Aselsan and Turkish Aerospace Industry (TAI). Aselsan increased sales by 5.6%, but fell from 66th to 73rd. TAI, in turn, showed an increase of 15.1% and entered the rating for the first time, reaching 89th place. Analysts note that Turkey is striving to reduce dependence on foreign companies, and is also pursuing an aggressive export policy. All these factors contribute to the growth of sales of various companies, primarily Aselsan and TAI, which were able to get into the new rating.
The SIPRI Top 100 for 2014 includes a dozen and a half Asian companies (excluding Chinese), which are showing good growth. In particular, South Korean organizations increased sales by 10.5%.
Market leaders
The international market for arms and military equipment has long been divided among major players, which is why the top part of the SIPRI rating rarely undergoes major changes. So, in the top ten, only one line has changed. The French company Thales dropped from 10th place to 12th, giving its direct "pursuers" an opportunity to rise one line higher. After these changes, the top ten leaders are closed by the American company L-3 Communications, and literally on the threshold of the top ten is now the Russian Air Defense Concern Almaz-Antey.
Changes in income levels by country in 2013-14. Russia shows record growth
The leader of the rating, for several years in a row, is the Lockheed Martin company from the USA. Despite the general negative trends in the market, it managed to increase sales from 35.49 billion dollars in 2013 to 37.47 billion in 2014. At the same time, 82% of revenues fell on military orders, and the total income amounted to 45.6 billion.
The second place was again occupied by Boeing, which, however, does not rely on military contracts. Of the $ 90.762 billion in revenue, military orders accounted for only 31% - $ 28.3 billion. A year earlier, military sales were $ 30.7 billion. Despite a noticeable decline in revenues from the construction of military aircraft, Boeing retains its second place in the ranking.
The British company BAE Systems closes the top three with military sales of $ 25.73 billion out of $ 27.395 billion in total revenue (94%). Like Boeing, it showed a decline in sales, but the overall market environment did not affect the company's place in the ranking.
The fourth place was again taken by the Americans from Raytheon, who earned $ 21.37 billion on military orders. At the same time, 94% of sales with a total value of 22.826 billion fell on military products. During 2014, the company's revenues fell: a year earlier they amounted to 21.95 billion.
The top five is closed by the American company Northrop Grumman. In 2013-14, its sales of military products fell from $ 20.2 billion to $ 19.66 billion. At the same time, such orders accounted for 82% of the total revenues of $ 23, 979 billion.
Also, the top ten leaders, according to SIPRI estimates, include General Dynamics (USA), Airbus Group (Europe), United Technologies Corp. (USA), Finmeccanica (Italy) and L-3 Communications (USA). Their revenues from the supply of military products ranged from 18.6 (General Dynamics) to 9.81 (L-3 Communications) billion. A noticeable gap between different companies, as well as the almost simultaneous growth and fall of indicators, leads to the fact that the top ten is almost unchanged.
Russian companies
The SIPRI Top 100 for 2014 includes 11 Russian defense enterprises. At the same time, however, the report contains 19 organizations. The fact is that the rating "out of total" contains data on some factories and enterprises that are part of larger corporations. They are not full-fledged participants in the rating, but they are nevertheless included in the final table with a corresponding mark, and their location is determined in accordance with the main financial indicators. Russia this time is represented by eight such organizations.
The Almaz-Antey Air Defense Concern showed the best results in 2014. Sales of air defense systems and other military products with a total volume of $ 8.840 billion allowed it to rise one position compared to 2013 and take 11th place. Income growth for the year was 800 million. The Concern's total revenue for the last year was $ 9.208 billion, of which 96% fell on military orders.
The United Aircraft Corporation moved up from 15th to 14th place with an annual income of $ 6.11 billion (80% of all sales of $ 7.674 billion). In 2013, aircraft manufacturers delivered products worth 5.53 billion. Like Almaz-Antey, UAC showed high growth in percentage terms.
UAC is followed by the United Shipbuilding Corporation, which managed to rise from 17th place to 15th. This rise was facilitated by the growth of revenues from military contracts from 5, 11 to 5, 98 billion. Warships accounted for 82% of orders, and the total revenue for the year was $ 7, 329 billion.
Russian Helicopters has moved up three ranks and is now in 23rd place. Last year, he supplied military equipment for 3.89 billion dollars against 3.5 billion in 2013. Military equipment accounted for 90% of orders, while total sales amounted to $ 4.3 billion.
For the first time in the SIPRI rating, there is the United Instrument-Making Corporation, formed last year. The production and sale of military products with a total value of $ 3.44 billion allowed it to start from 24th place. The total revenue of this corporation last year amounted to 4.019 billion (91% on military orders).
The Tactical Missiles Corporation has moved up a dozen places, now occupying 34th place in the rating. During the year, its military revenues increased from 2.23 to 2.81 billion dollars (95% of the total income of 2.96 billion).
The only Russian organization that failed to maintain or improve its place in the ranking is the United Engine Corporation, which has moved from 36th to 38th place. The reason for this drop may be a decrease in sales by $ 120 million to 2.6 billion. However, military aircraft engines only account for 61% of the total $ 4.267 billion in revenue.
Another newcomer in the ranking, representing Russia, is the High-Precision Complexes holding, which starts from 39th place. This organization deals only with military products and last year sold products worth $ 2.35 billion.
Sukhoi is part of the United Aircraft Corporation, but is included in the “out of competition” rating. Revenues of 2.24 billion (2.32 billion dollars in 2013) would place it in 45th place. Interesting information about non-military orders is provided: according to SIPRI, the company "Sukhoi" last year sold similar products for only $ 3 million.
Instead of "Sukhoi" in 45th place is the Concern "Radioelectronic Technologies" with sales at the level of 2.44 billion dollars. The increase in sales from 1.85 billion in 2013 helped the Concern rise from 54th place to 45th. Military contracts account for 82% of sales for a total of 2.731 billion.
Swedish analysts do not have complete information on the sales of the Russian corporation Uralvagonzavod, but they nevertheless collected the available data and made conclusions. According to SIPRI estimates, in 2014 this organization sold military products for $ 1.45 billion - 510 million more than in 2013. This allowed Uralvagonzavod to move up from 80th place to 61st. Interestingly, military orders accounted for only 44% of all revenues at the level of $ 3.317 billion.
Distribution of income among countries participating in the ranking
In the 2013 ranking, the Sozvezdie concern was in 85th place. In 2014, he became part of the United Instrument-Making Corporation, which is why he is no longer an independent participant in the rating. Nevertheless, thanks to the growth of military sales from 910 to 1270 million dollars (89% of the total revenue of 1. 428 billion), the Sozvezdie concern could take 66th place.
The 68th place could remain with the Irkut corporation, which, nevertheless, is part of the UAC. This organization last year earned 1.706 billion dollars, of which 73% or 1.24 billion fell on military equipment. Compared to 2013, there is a drop in indicators - during this period, Irkut earned 1.37 billion on military orders.
The 71st place could be taken by the Ufa Engine-Building Production Association (UMPO), which is a subdivision of the United Engine-Building Corporation. Last year, it earned $ 1,170 million, 70 million more than in 2013. Total revenue was $ 1.272 billion (92% on military orders).
The Sevmash plant, which belongs to the United Shipbuilding Corporation, could take 75th place, having earned 1.04 billion over the past year. The annual growth in military revenues was only $ 10 million. In total, "Sevmash" fulfilled orders worth $ 1.339 billion - 78% fell on military contracts.
The line below could be the MiG company, which is part of the UAC. In 2013 and 2014, she earned $ 950 and $ 1,020 million, respectively. Moreover, all orders concerned only military equipment.
The company "Zvezdochka" from the USC last year earned $ 990 million on military contracts, which would have allowed it to take 80th place.
Admiralty Shipyards completed orders with a total volume of 900 million (40 million more than in 2013). Warships accounted for 95% of revenues totaling 946 million. Such indicators would allow the plant to count on 87th place.
For the first time, the organization RTI named after V. I. Mints, engaged in the production of radio electronics. In 2013-14, it improved its revenues from $ 780 million to $ 840 million (45% of all contracts worth $ 1.844 billion). It is noteworthy that in 2013 this organization almost got into the rating, stopping at 101st place. Now she has risen a dozen positions and has become a full-fledged participant in the "competition".
***
According to the Stockholm Peace Research Institute, the main trends in the international arms and military equipment market remain unchanged. Overall market performance is falling, with some countries growing in share and others falling in sales. At the same time, despite all these tendencies, the top ten leaders remain almost unchanged, while the enterprises of the Russian defense industry generally show steady growth. A good demonstration of this growth is the increase in the number of Russian enterprises from 9 to 11, as well as the entry of several organizations “out of competition”.
Unfortunately, SIPRI takes too long to process the data and compile a rating of weapons manufacturers. The report is published only by the end of the year following the one under consideration. Thus, changes in the market this year, as well as new indicators of domestic and foreign enterprises will be summarized in a new rating and published only a year later. However, before that, SIPRI will publish several other reports on the state of the global arms market, which means that over the next year, experts and the interested public will not be left without food for thought.
Press release release report:
Full text of the report:
