Russia's Arms Makers Outgun Britain's to Become World's No. 2 Weapons Manufacturers

  By Robert Wall

LONDON--Russian arms makers have become the world's second-largest by sales, trailing only the U.S., after being bolstered by Moscow's heavy spending to modernize Russia's armed forces, according to a closely watched survey.

Lockheed Martin Corp. (LMT) defended its position as the world's largest arms maker by sales in 2017, ahead of Boeing Co. (BA), according to the annual report by the Stockholm International Peace Research Institute. U.S. missile maker Raytheon Co. (RTN) rounds out the top three in the sales ranking compiled by the think tank.

But Russian anti-aircraft-weapons maker Almaz-Antey (KBAA.RS), producer of the S-400 anti-plane and anti-missile system that Moscow has deployed to Syria and Crimea, broke into the top 10, with two other Russian companies not far behind, according to the SIPRI data. It is the first time that a Russian company has made the top 10.

U.S. arms makers in the list's top 100 secured $226.6 billion in sales last year, against the global total of $398.2 billion, SIPRI said--a share of about 57%. Russian companies combined to secure 9.5% of the global total after an 8.5% increase in annual sales to $37.7 billion in 2017.

Although Russian arms makers, including Almaz-Antey, have had a steady flow of exports, "the growth in the last few years is largely the result of the higher procurement spending from Russia, given the modernization of the armed forces," according to Siemon Wezeman, senior researcher at SIPRI's Arms Transfers and Military Expenditure Program.

Russia hasn't just been buying new anti-aircraft systems, it's also been acquiring more modern combat planes and warships. Still, Russian domestic defense procurement spending is showing signs of slowing.

Mr. Wezeman said that this is driving the government in Moscow to push companies to be better at exporting weapons.

The Russian surge relegated the U.K. to third place in SIPRI's ranking, with $35.7 billion in arms sales. London-based BAE Systems PLC (BA.LN) defended its position as world's No. 4 arms maker. The U.S. is the largest market for the British weapons producer.

The SIPRI ranking is slightly distorted by the absence of Chinese entities, which don't report sales consistently. Mr. Wezeman said three Chinese companies will likely be in the top 10, with a dozen suppliers among the top 100 just based on the country's domestic equipment spending. Most of that money flows to domestic suppliers, he said.

The data indicated that emerging arms makers are also showing signs of growth. India, the largest such arms producer, saw sales of its weapons manufacturers rise 6.1% in 2017 compared with the year prior. In Turkey, the weapons-making industry increased arms sales by 24%, SIPRI said.

Write to Robert Wall at robert.wall@wsj.com

(END) Dow Jones Newswires

December 09, 2018 18:15 ET (23:15 GMT)

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