aerospace and defense sector

Analysis

2017 Global Aerospace and Defense Sector Financial Performance Study

Defense subsector expands, while commercial aerospace growth slows down

The 2017 study looks at the top 100 global aerospace & defense companies that have generated at least US$500 million in revenues in 2016. This assessment allows Deloitte to provide industry executives with a detailed understanding of how their sector is performing and how the aerospace & defense segments are performing relative to each other.

Global aerospace & defense (A&D) sector revenues grew by 2.4 percent to US$674.4 billion in 2016, slightly above the estimated global domestic product (GDP) growth of 2.3 percent.

Key findings

  • The global defense subsector continued to recover as global defense spending increased, especially in the United States.
  • Global commercial aerospace revenue growth slowed from 6.3 percent in 2015 to 2.7 percent in 2016.
  • Global defense operating margin growth strengthens as the commercial aerospace margins tighten.
  • Propulsion segment was the leader in operating margins. However, Tier two suppliers now rank second.
  • Debt levels continue to rise as companies increase leverage to finance acquisitions, share buybacks, and develop new and innovative products.
  • US and European A&D stocks outperformed their respective market indices.

 

The following four key themes highlight what the top 20 A&D companies are focusing on and communicating to their shareholders:

  • Achieve long-term operational performance by managing cash, improving processes, and through more effective program transformations.
  • Secure capital to create custom product (including aircrafts and engines) improvements which can lead to growth in deliveries and larger returns.
  • Enhance innovation capabilities through alliances or acquisitions, as well as employing the best talent.
  • Support continued business growth through investing in new services, focusing on new customers and markets as well as on contracts and technologies.
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