In 2023, global military expenditure rose for the ninth consecutive year, exceeding $2.4 trillion. This surge, fueled by the ongoing Russia–Ukraine war and escalating geopolitical tensions, marked a 6.8% increase—the largest annual rise since 2009. This pushed world military spending to its highest level recorded by SIPRI (Stockholm International Peace Research Institute). The global military burden, defined as military expenditure as a share of GDP, reached 2.3%, with governments dedicating an average of 6.9% of their budgets to defence or approximately $306 per person.
For the first time since 2009, all five geographical regions reported increases in military spending. The United States maintained its position as the world’s largest military spender with an expenditure of $916 billion. This figure was more than the combined spending of the next nine highest spenders and 3.1 times China’s defence budget, the second-largest globally. Europe and Asia-Pacific are also significant, driven by regional conflicts and military modernisation programmes.
The US is also the largest producer and exporter of weapons with its share growing significantly, with its arms exports increasing by 17% compared to 2014–2018, expanding its global share from 34% to 42%. The revenue of 42 companies accounted for $302 billion, over half of the total.
Leading Companies
The defence sector is dominated by a few key players, most of which have secured long-term government contracts:
Lockheed Martin: The industry leader, with over $67.6 billion in 2023 sales, experienced a robust financial performance in 2024, driven by increased defence spending and strategic contract wins. Key highlights include an 8.6% year-over-year rise in quarterly revenue and a record backlog of over $165 billion. The company also delivered significant shareholder value, increasing its quarterly dividend by 5% to $3.30 per share, marking the 22nd consecutive annual increase. Additionally, Lockheed expanded its share repurchase program, authorising up to $10 billion for future stock buybacks.
The outlook for 2025 is optimistic and the company is poised for another strong year. Analysts expect continued growth fueled by global defence spending, particularly in Europe and the Indo-Pacific, and Lockheed’s strong international order book.
Northrop Grumman demonstrated strong financial resilience in 2024, benefiting from robust defence demand amid global geopolitical tensions. The company reported anticipated annual revenues between $41 billion and $41.4 billion, a slight increase compared to the prior year. Adjusted earnings per share (EPS) were guided to range from $25.65 to $26.05, reflecting an upward revision from earlier expectations due to robust year-to-date performance. Operating income for 2024 is expected to total $4.525 billion to $4.575 billion.
Looking ahead, Northrop Grumman anticipates revenue growth of 3–4% in 2025 and is positioned to capitalise on a favourable defence budget environment.
Boeing: Boeing’s defence, Space & Security (BDS) division experienced a challenging 2024, marked by significant financial struggles. The unit incurred approximately $3.2 billion in charges on key fixed-price development contracts. These charges were largely attributed to cost overruns, delays, and disruptions from a machinists’ strike that paused production for nearly two months. Overall, Boeing defence reported quarterly losses totaling $2.4 billion, contributing to the company’s projected $8 billion loss for the year.
In 2025, Boeing anticipates gradual recovery but expects challenges to persist. Despite a robust global demand for defence products, driven by heightened geopolitical tensions, the company’s profitability remains under pressure.
RTX Corporation (formerly Raytheon): In 2024, RTX Corporation demonstrated solid financial results driven by a balanced performance across its aerospace and defence segments. The company reported an estimated adjusted sales range of $78.75 billion to $79.5 billion, reflecting an 8–9% organic sales growth compared to 2023.
RTX Corporation’s defence division delivered solid performance in 2024, driven by consistent demand for key systems and strong execution on long-term contracts. Sales and the adjusted operating profit grew by approximately 7% year-over-year. Major achievements included securing significant bookings in radar technology and missile defence systems, which expanded the unit’s backlog to $51 billion.
In 2025 the company is well-positioned for sustained growth in 2025, supported by a global increase in defence budgets and RTX’s strong portfolio.
General Dynamics experienced a strong 2024, with robust financial growth driven by demand across its aerospace and defence segments. For the first nine months of the year, the company reported $34.4 billion in revenue, a 12.3% increase from the same period in 2023. The defence unit secured substantial contracts in shipbuilding, munitions, and satellite ground systems, contributing to a growing backlog valued at $92.6 billion.
General Dynamics anticipates continued growth in 2025, supported by a robust defence spending environment and heightened demand for innovative technologies. The company is well-positioned with a large backlog and significant potential value in unexercised contracts.
Other notable contributors include BAE Systems, Airbus, and Elbit Systems, offering specialised technologies in Europe and the Middle East.
In summary, the defence sector in 2025 presents robust opportunities for companies focusing on cutting-edge technologies, unmanned systems, and cybersecurity, while traditional platforms like fixed-wing aircraft and naval vessels continue to evolve. Major players such as Lockheed Martin and Northrop Grumman and the others listed above are poised to benefit significantly from these trends.
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