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Arms sales by the world’s 100 biggest weapons companies have increased for the first time in five years, hitting $374.8bn in 2016.

The Stockholm International Peace Research Institute (Sipri) on Monday publishes its annual assessment of global arms sales by the top 100 companies producing weapons and military services. Last year saw the end of five consecutive years of decline with a 1.9 per cent increase in total sales.

The report comes as global tensions rise in regions such as south-east and east Asia and the Middle East. The Oslo-based Peace Research Institute estimates that while the number of conflicts fell globally in 2016, it remains the fifth deadliest year since the end of the cold war.

Sipri’s assessment shows that the world’s biggest weapons makers are selling almost 40 per cent more arms than they were 15 years ago, when its study of the top 100 began. In a separate report earlier this year, Sipri found that the global transfer of big weapons systems has risen over five years to its highest volume since 1990, due to a sharp rise in imports by the Middle East.

“The growth in arms sales was expected and is driven by the implementation of new national major weapons programmes, ongoing military operations in several countries and persistent regional tensions that are leading to increased demand for weapons,” the report states. 

Those weapons programmes include substantial investment in naval and air capacity, including submarines in the US and UK, as well as new generation combat aircraft such as the F-35, manufactured by Lockheed Martin. The US, with the world’s largest defence budget, has identified spend this year of $45bn on aircraft and related systems and $27bn on shipbuilding and maritime systems.

According to Sipri, the top 10 weapons producing companies accounted for 52 per cent of the total $374.8bn in sales last year, with combined revenues of $194.8bn. The same 12 companies have shared the top 10 rankings for the past 15 years.

The report does not include Chinese companies, due to a lack of data on weapons sales. However, it estimates that at least two — the aircraft producer, Avic, and land system producer, Norinco — could be ranked in the top 10.

The world’s biggest arms company, Lockheed Martin, significantly widened its lead over Boeing as number two, in part due to the acquisition of Sikorsky helicopters and also due to the ramp up in production of the fifth generation combat jet and the world’s most expensive military procurement programme, the F-35.

US and western companies dominate the list, accounting for 63 of the top 100 places, and together claim 82.4 per cent of total sales in 2016. Sales by the 38 US-based companies came to $217.2bn, up 4 per cent on 2015, driven by big costly programmes but also strong growth in military services.

Total sales by western European companies remained stable. Reflecting intensifying tensions over North Korea’s nuclear weapons programme, South Korean companies showed particularly strong sales increases, helping to drive a 12.3 per cent increase in sales by “emerging producers”.

Rob Stallard, defence analyst at Vertical Research, said that increased weapons sales would continue to support investor interest in defence companies.

“The risk environment globally may not be as severe as at some points in the past, but it does seem to be heightened,” he said in a report last week to clients. “The majority of countries do seem to be reacting to this with increased defence spending, which doesn’t appear to waning anytime soon. So while defence multiples, at least in the US, may be at peak levels, we think they are justified.”

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