STOCKHOLM, Sweden (AP) — Major companies in the arms industry saw a 4.2% increase in overall revenue in 2023 with sharp rises for producers based in Russia and the Middle East, a new report said Monday.

The report by the Stockholm International Peace Research Institute, or SIPRI, said revenues from the top 100 arms companies totaled $632 billion last year in response to surging demand related to the wars in Ukraine and Gaza.

It said that “smaller producers were more efficient at responding to new demand."

By contrast, some major companies such as U.S.-based Lockheed Martin Corp. and RTX that were involved in complex, long-term contacts registered a drop in earnings.

The 41 U.S.-based arms companies among the world's top 100 saw revenues of $317 billion, a 2.5% increase from 2022, the report said.

Since 2018, the world's top five companies in the industry are Lockheed Martin Corp., RTX, Northrop Grumman Corp., Boeing and General Dynamics Corp.

Six arms companies based in the Middle East and in the world's top 100 saw their combined revenues grow by 18%, to a total of $19.6 billion.

“With the outbreak of war in Gaza, the arms revenues of the three companies based in Israel in the top 100 reached $13.6 billion,” the highest figure ever recorded by Israeli companies in the SIPRI reports, the institute said.

The slowest revenue growth in 2023 was in the European arms industry, excluding Russia. Revenue totaled $133 billion or 0.2% more than in 2022, as most producers were working on older, long-term contracts.

But smaller companies in Europe were able to quickly tap into the demand related to Russia's war against Ukraine.

Russia's top two arms companies saw their combined revenues increase by 40%, to an estimated $25.5 billion.

“This was almost entirely due to the 49% increase in arms revenues recorded by Rostec, a state-owned holding company controlling many arms producers,” the SIPRI report said.