What Kind of Businesses Benefit from War?

Some companies may gain indirect profits from war by supplying goods and services to the armed forces, or by taking advantage of political instability and destruction to gain natural resources at a lower cost, or by establishing their economic dominance. These companies are often involved in the defense industry, the provision of security services, the energy sector, and raw materials.

major war zones

defense industry Ukraine has apparently been among the first to be affected by the war, which has had economic consequences for the defense companies involved in the conflict. Some companies have thus benefited from increased demand for defense-related products and services, such as weapons, military equipment, and logistics support services.

The war in Ukraine has also had an impact on companies that supply security features, such as private security companies and security consulting firms. The instability and violence in the region has increased the demand for security services. Security companies have been asked to provide security services for people and property as well as for war related security missions. Some companies have also given Security Intelligence and Consulting Services Governments and armed forces involved in the conflict.

It also had an impact on energy sector companies, which are involved in Energy Generation and Distribution, including natural gas and oil. The war disrupted energy markets in the region. The supply of natural gas from Russia has been disrupted or greatly reduced in many countries. This has caused disruptions in the distribution of natural gas in many countries in Europe. Some companies have been able to take advantage of the situation to raise their prices and profit margins, but it has also negatively affected consumers and companies that rely on natural gas for their operations.

advantage on the contrary

Not all companies in these industries are total winners. The war in Ukraine has also had negative consequences for them such as increased costs associated with the provision of security services, production or protection of workers and facilities in the region due to economic and political instability, which has reduced production and distribution. of energy in some areas. Companies in the energy sector have also faced disruptions in supply chains and logistics operations due to tensions and conflicts. So they may have to face margin cut.

Some of the biggest French companies that have won

CAC40 companies forecast record profits of €142 billion in 2022, with luxury and energy sectors leading the way. According to Agence France-Presse (AFP), their turnover of 1,729 billion euros, up 19% on a year, was notably hit by sales boosted by inflation, caused by the war for many groups. Note: Net profit is 9% less than in 2021, where it was around 156 billion. However, war is not always the source of their profits.

Thus, Vivendi 25 billion is actually due for a sale. In 2022, the company actually went into loss with a loss of 1 billion euros. However, companies such as TotalEnergies, not listed on the stock exchange, at 19.5 billion euros, or even CMA-CGM, the world’s third largest shipowner, was able to announce $24.9 billion. Similarly, the luxury sector (LVMH, Kering, Hermès, L’Oréal) took advantage of the increase in production costs to increase its selling prices and its profits increased by 23% in one year, i.e. more than 4, 5 billion euros. growth was observed. Some companies, such as semiconductor maker STMicroelectronics (+118%), have also seen increased demand for the scarce commodity of electronic chips.

However, some large companies are losing, such as ArcelorMittal, which announced $1 billion in provisions to cover its Ukrainian losses.

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