The British arms manufacturing company announced record profits for the year 2023, as stated in its latest annual earnings report.BAE reported pre-tax profits of £2.7 billion ($3.4 billion) from sales worth £25.3 billion for the year ending in December 2023.

These results come amid a significant surge in the company’s share price since the beginning of the war in Ukraine, with shares surpassing the £1200 threshold in February. Its value was approximately £600 when Russia launched its invasion in February 2022. Charles Woodburn, CEO of BAE, cited increasing instability worldwide as a reason for increased defense spending.

In a statement, he said: “In a year where we have seen increasing instability across Europe, the Middle East, and other parts of the world, this already highlights the vital role we play in protecting national security.” BAE’s products include fighter aircraft, drones, submarines, military computer systems, and ammunition.

Gaza War

While the conflict in Ukraine has been the major driver of defense spending in recent years, the war in Gaza also fuels concerns of a broader global conflict.

Increased Military Spending

BAE manufactures parts for some of the weapons used in the Israeli conflict in Gaza, including the F35 aircraft.

Pro-Palestinian protesters targeted BAE Systems factories due to their weapons being used by Israel, including at several sites across the UK in December.

Competitors of BAE, including the American company Lockheed Martin, also reported strong profits in 2023, nearing $7 billion.

The report stated that the threat posed by the expansion of wars in Ukraine and Gaza to include Western countries leads to increased military spending in the West.

In Ukraine, the Russian army still controls most of the eastern territories despite pumping tens of billions of dollars to help Kiev repel the invasion.

In the Middle East, the Israeli war on Gaza threatens to expand into Lebanon and beyond, with regional armed groups allied with Israel’s competitor, Iran, launching low-intensity attacks against Israel or its allies.

In Lebanon, Hezbollah regularly attacks Israeli positions on the southern border, while Israel responds with frequent airstrikes.

In Yemen, the Houthi group is engaged in a maritime conflict with Western powers, including the United States and the United Kingdom, targeting ships in the Red Sea believed to be carrying goods to Israel.