Saab and Kongsberg record record orders as Europe increases defense spending

PARIS — Nordic defense companies reported record levels of performance last year as European countries ramped up military spending in the face of Russia’s war in neighboring Ukraine.

Sweden-based Saab, the world’s 33rd largest defense contractor, saw orders increase by 23% last year to SEK 77.8 billion (US$7.4 billion), according to Defense News’ Top 100 list. It was announced that orders received reached a record high. 153.4 billion kronor (US$14.6 billion).

Norway’s Kongsberg, which ranks 61st on the list, won orders worth SEK 37.8 billion (US$3.6 billion) for defense in 2023, bringing the sector’s order book to a record SEK 65.4 billion (US$6.2 billion). USD). This includes the company’s largest contract in its history, a 16 billion kronor deal for a coastal defense missile system for Poland.

In response to Russia launching a full-scale invasion of Ukraine in February 2022, European Union member states increased their defense budgets. The recurrence of a major war in mainland Ukraine has raised concerns among European governments that their defense industrial bases and armed forces are inadequately prepared. For intense combat.

“Defense sales have increased since the Russian invasion of Ukraine,” Ed Arnold, a European security researcher at the Royal United Services Institute, a London-based think tank, told Defense News. “The main problem is that countries are scrambling to obtain defense kits and equipment because production lines have not ramped up enough yet.”

European Council President Charles Michel said in November that EU countries will spend around 270 billion euros ($291 billion) on defense in 2023. The 27-nation bloc spent a record €240 million in 2022.

Norway plans to order a national advanced surface-to-air missile system from Kongsberg for delivery to Ukraine, the country says, in a deal valued at SEK 3.45 billion and including 10 launchers and four fire control centers. This was announced in a statement on Friday. This will be in addition to equipment purchases to replenish stocks after the country donated supplies to Ukraine. Norwegian Defense Minister Bjorn Arild Gram said he wanted to reacquire air defense capabilities “as soon as possible.”

Saab CEO Mikael Johansson said at the company’s full-year results conference that European countries recognize they need to spend more on defense to deter Russia. He also said it was “very scary to see” how the US was wavering in its support for Ukraine, and noted that Europe needed to step up.

He called on governments to provide long-term commitments to the continent’s defense industry in exchange for investment in production capacity and new production sites to avoid a repeat of the dismantling of local defense industries after the end of the Cold War. . He acknowledged that expanding production capacity in Europe “will take time.”

“We’re willing to take the risk, but if we’re going to do more in terms of new locations and increased capacity, we need to come to some kind of agreement with the government,” Johansson said. “We can’t afford to tear things apart again. That’s what long-term commitment means.”

Saab’s business in the fourth quarter of 2023 included a SEK 1.3 billion order for Carl Gustav recoilless rifles and a SEK 1 billion order from Boeing for fuselage systems for the T-7 jet trainer. Ta.

In Finland, Patria reported that orders increased by 19% to 946 million euros, with year-end orders increasing to 1.94 billion euros. The company, which makes products such as armored vehicles and mine-sweeping sensors, is 49.9% owned by Kongsberg, with the remainder owned by Finland. Patria is his 91st defense company in the world.

“Medium-sized companies like Patria are doing very well because they produce many products that can be put into production quickly, as opposed to large-scale defense programs that often take decades to develop.” said Arnold.

Meanwhile, the UK Ministry of Defense will increase spending on local commerce and industry by 8% in the 2022-2023 financial year to a record 25 billion pounds (US$32 billion) after adjusting for inflation, the ministry reported on Thursday. . Total spending, including transactions with foreign suppliers, reached £28bn.

Arms and ammunition recorded the biggest rise, with spending on domestic industry rising 76% to £2.1bn, the highest level in at least a decade. Local spending on shipbuilding and repairs rose by 23% to £5.5bn, driven by a £2bn investment to support the Dreadnought-class nuclear submarine project.