Raytheon Sees Demand for Patriot Missiles as U.S. Pushes Exports

(Bloomberg) -- Raytheon Co. sees international demand for its Patriot air missile-defense system continuing to rise after the signing of a $4.75 billion supply contract with Poland in March, as defense contractors and the Trump administration seek to bolster U.S. arms exports.

“Patriot sales to Poland bode well for us as we continue to broaden the number of countries we do sell patriots to,” John Harris, chief executive officer of Raytheon International Inc. told Bloomberg News Friday on the sidelines of a security forum in Singapore.

Amid conflicts and tension from Yemen to the South China Sea, President Donald Trump has vowed to expand U.S. arms sales internationally. He said in April that he’s ordering government agencies to help speed exports to allies of “important, great military equipment.” Even before the new push, U.S. arms exports surged 25 percent over five years to 2017, according to data released in March by the Stockholm International Peace Research Institute.

With Raytheon expanding its sales of the missile-defense system to 14 countries outside the U.S., Harris said the Patriot of today isn’t the same defense system as the one first deployed in the 1980s.

“When there are questions about its relevance, having an informed and sophisticated buyer like Poland make a decision around Patriot does a lot to explain that in fact we have continued to evolve and continued to grow the capacity of that system,” Harris said.

Under Poland’s largest-ever weapons purchase, signed in March, Waltham, Massachusetts-based Raytheon will start deliveries of rockets and communication systems in 2022. Other countries using the Patriot include Germany, Japan, Israel, Kuwait, Taiwan and South Korea.

Poland, which shares a border with Russia’s Kaliningrad enclave, hosts U.S. troops on its territory and sees the missile system as a step toward strengthening the North Atlantic Treaty Organization’s eastern flank.

Asia-Pacific Sales

In Singapore for the Shangri-La Dialogue, an annual Asian security conference that this year includes defense ministers and military chiefs from more than 20 countries including U.S. Defense Secretary Jim Mattis, Harris said “last year about 32 percent of our sales were international and 30 percent of that was here in the Asia Pacific region. We see this as a growth market.”

Raytheon reported $6.27 billion in first quarter sales in April, beating estimates, aided by Patriot missile orders. Revenue growth is expected to continue for the rest of the year.

Harris some of that growth was coming from emerging regional customers, and from providing new capabilities to longstanding customers such as South Korea and Japan, which continue to pursue their defensive capabilities even as they endorse Trump’s efforts to seek a deal for North Korea to give up its nuclear arsenal.

“They’re looking at new missile defense solutions to defend against rogue regimes like North Korea,” Harris said.

In South Korea, Harris added, Raytheon was continuing to provide “integrated air and missile defense systems,” as well as “maritime situational awareness” to the Philippines that would help to resolve border security concerns.

©2018 Bloomberg L.P.