General Dynamics executives on Wednesday suggested that demand increases sparked by Russia’s invasion of Ukraine have grown more concrete during the previous quarter, as eastern European countries seek to bolster inventories of ground vehicles, munitions and bridge systems.
Company officials have for months been saying they expected the war in Ukraine to lift revenues, but during an earnings call Wednesday CEO Phebe Novakovic suggested that those theoretical increases in demand had become real.
“We saw a number of things in the quarter, primarily Stryker and Abrams, as well as [Mobile Protected Firepower] is beginning to ramp up, as is Poland,” Novakovic said. “And we saw some munitions orders also related to the Ukraine.”
General Dynamics Land Systems finalized a $1.1 billion deal in late August to produce 250 Abrams tanks for Poland that had been part of an earlier Pentagon weapons package.
In April, Novakovic said it was “premature” to make assumptions about revenue growth from the war in Ukraine.
The change in messaging comes from strong demand signals from European countries, she suggested on the Wednesday earnings call: "We're seeing, beginning to see, increases in vehicle orders and vehicle RFPs coming out, particularly but not exclusively in the former, you know, Eastern Bloc.”
Novakovic said the company is also anticipating growing demand for munitions and ammunition from European countries. The company is working to ramp up production of ammunition in Europe, she said.
Another area of European emphasis favors bridge systems produced by General Dynamics European Land Systems in Germany: “We've seen demand for bridges (increase), because there's frankly a lot of water in Europe,” she said.
The company could deliver the bridge systems relatively quickly, she said, and several factors should allow it to deliver ground vehicles shortly after.
“It just depends on the vehicle and exactly what modifications or changes folks want. We're not looking at clean sheet vehicles: We're looking at changes to existing vehicles that we have updated consistently and throughout the years,” she said. “So, it will depend. I suspect a year, some cases 18 months. Certainly, I don't expect a whole lot more than that.”