Throttling back: Midyear outlook for the global aerospace and defense industry |
The global aerospace and defense (A&D) industry capped off a record-setting five-year period in 2008, with strong growth in sales revenue of 7.9% to US$595 billion and earnings of US$54.2 billion . However, the global economy slipped into economic turmoil in the fourth quarter of 2008, resulting in orders for new commercial aircraft dropping dramatically and business jet manufacturers entering a deep slump. The result was declining financial performance for the entire industry on average, which continued the negative trend into the first half of 2009. Military equipment spending, led by the U.S. Department of Defense (DoD), is moderating, and several weapons platform programs are being terminated or transformed.
Financial performance fell across the board for the top 20 global A&D firms. In the 2009 first quarter financial results, sales revenue growth fell 83%, down from 10% to 1.7%. Operating profits decreased 12%, while quarterly operating margin declined by 13.9%, from 10.3% to 8.9%. The following chart shows the financial performance for the top 20 global industry firms and as a group.
As we near the close of the second quarter of 2009, the key question on the minds of the industry executives and shareholders: when is the A&D industry expected to rebound?
| Company | Quarterly revenue year over year (YoY)% change | Quarterly operating profit YoY% change | Quarterly operating margin YoY% change |
|---|---|---|---|
| Boeing | 3.20% | -43.02% | -44.79% |
| EADS | -14.07% | -71.50% | -66.84% |
| Lockheed Martin | 3.91% | -10.27% | -13.65% |
| Northrop Grumman | 7.72% | 41.16% | 31.05% |
| General Dynamics | 17.97% | 5.11% | -10.90% |
| Raytheon | 9.90% | 16.91% | 6.38% |
| Finmeccanica | 34.12% | 75.61% | 30.93% |
| General Electric* | 11.50% | 39.35% | 24.98% |
| United Technologies* | -9.87% | 23.31% | -14.91% |
| L3 | 3.71% | 2.17% | -1.48% |
| Safran | 2.43% | NA | NA |
| Thales | -0.22% | NA | NA |
| Bombardier* | -3.45% | 38.27% | 43.20% |
| Honeywell* | -8.94% | -13.32% | -4.81% |
| Textron | -23.59% | -80.89% | -74.99% |
| SAIC | 17.80% | 27.21% | 7.98% |
| Goodrich | -2.81% | -2.44% | 0.38% |
| ITT* | 0.06% | 7.53% | 7.48% |
| Embraer | -13.61% | -44.15% | -35.35% |
| Dassault Aviation | -27.68% | NA | NA |
| TOTAL | 1.68% | -12.12% | -13.87% |
*Partial company results based on A&D activities only
Source:Deloitte Services LP analysis from first quarter 2009 data for the U.S. companies and analogous public documents for the European companies
Note: The above companies represent the largest 20 global A&D companies for which quarterly revenue figures are available
Related content:
Holding pattern: Outlook for the global commercial and business aircraft industry
2008 Global Aerospace & Defense Industry Performance Wrap-up
Throttling back: Midyear outlook for the global aerospace and defense industry
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