News Article
Global Defence Industry Stabilises in 2010
While revenues losses were not reversed in 2010, companies in general managed to slow some growth. Profit margins returned to more traditional levels of four to six percent.
As the financial crisis hit home, defence departments have also had to take a long hard look at expenditure.
The impact of these decisions started to hit the defence industry in 2009, when revenues dropped 11 % and profitability was nearly cut in half, dropping below three % for the first time in seven years. Analysis from the Strategy Analytics Advanced Defence Systems (ADS) service report, “Defence Industry Profitability Gains in 2010,” shows that defence industry performance stabilised its financial performance for the year.
In conjunction with the release of this report, Strategy Analytics will be at the “A&D Technology & Requirements 2011” conference in Washington D.C., February 16-17.
Strategy Analytics analysis of twenty companies, including BAE Systems, Boeing, Cobham, EADS, General Dynamics, Harris, ITT, Lockheed Martin, Northrop Grumman and Raytheon, shows that revenues increased year-on-year by only 1% in 2010 to reach over $458 billion. This arrested the downward spiral, although not enough to reverse the revenue losses suffered in 2009. However, profitability improved considerably with year-on-year profits increasing where companies took steps to address the impact of defence budget constraints.
“2009 marked the first time in seven years that defence industry revenues had dropped,” observed Asif Anwar, Director ADS, at Strategy Analytics. “The industry did manage to stay in the black in 2009, but 2009 year-on-year profits dropped by over 49%.”
Anwar continued, “While revenues losses were not reversed in 2010, companies in general managed to slow some growth. Profit margins returned to more traditional levels of four to six percent.”
“Challenges remain for the industry in 2011, compounded by political inaction,” noted Eric Higham of Strategy Analytics. “Nevertheless, while we do not expect anything spectacular in terms of growth, we believe that the industry will retain an upward growth trajectory this year.”
