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US arms maker sees stable growth as nations replenish

stocks

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Mideast, Asia-Pacific tensions drive international sales

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Over 12 nations show interest in IBCS battle management

system

By Sabine Siebold

BERLIN, Nov 24 (Reuters) - U.S. defence company Northrop

Grumman ( NOC ) expects continued growth in Europe even if the

Russian war in Ukraine is halted, as nations aim to replenish

weapons stockpiles depleted during the conflict, the company's

chief of international business said.

Speaking to Reuters last Tuesday, Steve O'Bryan declined to

anticipate specific growth figures but pointed to the 32%

increase in Northrop's international sales during the last

quarter.

"We'd expect Europe to be in the same category," he said,

adding that growth would be achieved primarily through

partnerships rather than expanding the company's local workforce

or presence.

Northrop, maker of the B-2 Spirit stealth bombers used in

U.S. strikes on Iran's nuclear sites earlier this year,

currently employs about 2,200 of its 95,000 global staff in

Europe.

In Germany, Northrop has partnered with Rheinmetall

on the production of the centre fuselage for Lockheed

Martin's ( LMT ) F-35 fighter jets, as Rheinmetall, best known

for its land systems, shifts part of its focus toward the

aerospace sector.

O'Bryan also signalled strong growth prospects in the Middle

East and Asia-Pacific regions as its international business

grows faster than domestic business in the U.S., attributing the

expansion to heightened regional tensions.

"In Asia-Pacific, it's the growth of China and such, in the

Middle East, we've seen it with Iran and the conflict in Syria,

and in Europe, obviously Ukraine and Russia," he said.

CONVENTIONAL WISDOM NOW FAVOURS HIGHER STOCKPILES

Amid talks on ending the war in Ukraine prompted by a new

proposal for peace by Washington last week, shares of European

arms makers fell for a second successive session on Monday to

their lowest in more than four months.

O'Bryan said a potential ceasefire in Ukraine would not

hamper the company's business trajectory, highlighting what he

said were nations' realization that their stockpiles were too

low for conflicts akin to Ukraine.

"It has become conventional wisdom that the stockpiles need

to be much higher than they were (...) So this is not only

production to refill the stockpiles, but it's production that

needs to grow for years and years to come," he said.

He also noted that there had been no sales fluctuations

following the Gaza ceasefire agreement between Israel and

Palestinian militant group Hamas that took effect last month.

With air defence sales booming around the world, the company

is marketing its Integrated Battle Command System (IBCS), a fire

control and battle management platform that can integrate

various missile defences, including Raytheon's Patriot,

Israel Aerospace Industries' (IAI) Arrow, and the

U.S. THAAD.

The system is currently fielded in Poland, and Northrop has

signed agreements with German missile makers Diehl and most

recently MBDA to explore a closer

collaboration in Europe.

O'Bryan said that more than 12 countries have expressed

interest in IBCS, though he did not specify the nations.