The weapons manufacturing industry dropped billions in revenue during 2022 despite increased demand caused by the Russia-Ukraine war, according to the Stockholm International Peace Research Institute (SIPRI).
The SIPRI report released on Monday found that the world's top 100 international arms manufacturers had a total revenue of $597 billion in 2022, a 3.5 percent decrease from 2021.
At the same time, Russia's full-scale invasion of Ukraine—which began on February 24, 2022—resulted in "a strong increase in demand for weapons and military equipment."
SIPRI said that the reason for the revenue drop was mostly attributable to the leading 42 U.S. arms manufacturers, all of whom are in the global top 100, seeing sales decline by 7.9 percent between 2021 and 2022.
While revenues in other parts of the world including Asia and the Middle East rose, U.S. manufacturers were unable to keep up, citing production difficulties caused by supply chain issues and labor shortages amid the COVID-19 pandemic.
Regardless of the 2022 slowdown in the U.S., continuing demand from the Russia-Ukraine war and existing backorders are expected to result in a global revenue increase in the coming years.
"Many arms companies faced obstacles in adjusting to production for high-intensity warfare," Dr. Lucie Béraud-Sudreau, director of SIPRI's military expenditure and arms production program, said in a statement.
"However, new contracts were signed, notably for ammunition, which could be expected to translate into higher revenue in 2023 and beyond," she continued.
Top U.S. manufacturers Lockheed Martin and Raytheon Technologies experienced 2022 revenue decreases of 8.9 percent and 12 percent, respectively. Senior SIPRI researcher Nan Tian said in a statement that both companies were "beginning to see an influx of new orders linked to the war in Ukraine."
"However, because of these companies' existing order backlogs and difficulties in ramping up production capacity, the revenue from these orders will probably only be reflected in company accounts in two to three years' time," added Tian.
While it is not clear exactly when the expected global revenue increase will be reflected in data, SIPRI plans to release an annual "yearbook" publication that could include new figures in mid-2024.
Newsweek reached out for comment to SIPRI via email on Monday.
While U.S. manufacturers experienced decreased revenue, Russian arms firms were likely suffering more due to factors that include international sanctions spurred by the war in Ukraine and skyrocketing inflation.
The SIPRI report included data from only two Russian arms manufacturers—Rostec and the United Shipbuilding Corporation—which saw a combined 12 percent decrease in revenue in 2022.
SIPRI said that data from other top Russian firms that are making weapons and equipment for the war, such as Almaz-Antey and Tactical Missiles Corporation, were not included "due to diminishing transparency."
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