Lockheed Martin believes global instability is driving demand and sees an increase in annual profits. Washington’s proxy war in Ukraine has caused an increase in arms spending among NATO members, boosting weapons makers’ stock prices.
On Tuesday, Lockheed raised its annual profit and sales outlook on strong demand for military equipment. After making the announcement, the company’s stock price increased by one percent. Reuters reports, “[Lockheed] expects full-year net sales to be between $66.25 billion and $66.75 billion, up from its earlier forecast of $65 billion to $66 billion.”
The billions in profit are driven by sales of big-ticket systems like the F-35. However, Lockheed has struggled to produce F-35s that can perform its promised abilities. In May, the government found the planes’ engines have a serious problem dealing with heat. “The F-35’s engine lacks the ability to properly manage the heat generated by the aircraft’s systems,” POGO reported. “That increases the engine’s wear, and auditors now estimate the extra maintenance will add $38 billion to the program’s life-cycle costs.”
The arms maker has additionally experienced a boost in demand for smaller systems, like the Javelin anti-tank missile. The White House has shipped thousands of Javelin systems to Kiev since Joe Biden took office.
As well as predicting future success, Lockheed announced it beat expectations regarding quarterly sales. According to Reuters, “Quarterly net sales rose 8.1% to $16.69 billion, beating expectations of $15.92 billion.”
Last year, Ian Bond, director of foreign policy at the Centre for European Reform, described the surge in the market for weapons as the highest since the Cold War. “This is certainly the biggest increase in defense spending in Europe since the end of the Cold War,” he said.
Prior to the Russian invasion of Ukraine, Lockheed’s stock price traded below $340 a share, the price increased to over $450 within a few months. On Thursday, Lockheed’s stock was valued at $456 per sale.