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.
- 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.