Press releases

European A&D industry gains momentum with 5.4% revenue growth in 2013

14 July 2014

The European aerospace and defence (A&D) sector few more than four times as quickly as the United States’ A&D industry in the last financial year. European companies increased revenue by 5.4%, compared to 1.3% growth seen by their American counterparts. This is mostly because of the negative revenue performance of the US defence subsector and the strong revenue performance of key European commercial aerospace companies.

However, according to the Deloitte Global Manufacturing Industry group’s 2014 Global aerospace and defence sector financial performance study, Europe continues to lag the US in profit margin performance due mainly to one-time charges and certain difficulties in rationalising assets and reducing labour costs. The report finds that some level of regional consolidation may be needed in order to gain economies of scale, should that coincide with national employment and defence policies.

“Europe is a critical geographic region with European headquartered companies representing nearly 35% of total global A&D revenues,” said Tom Captain, A&D Sector Leader, Deloitte Global. “Even though the global A&D industry revenue growth rate declined from 5.9% to 3.1% in 2013, it added US$21.4 billion in revenues to the global industry.”

Additionally, the report projects that above average revenue growth will continue, if not accelerate slightly for the remainder of  2014, due to rate increases for commercial aerospace, new product introductions, and a flattening of government defence spending in both Europe and the United States.

End

Notes to editors

About the study
The DTTL Global Manufacturing Industry group’s 2014 Global aerospace and defence sector financial performance study analyses the top 100 A&D companies or business units of industrial conglomerates with A&D businesses that reported revenue of more than US$500 million in 2013 with financial statements filed by 31 December 2013 unless otherwise specified. The study was conducted by assessing performance based on calculating 26 key financial metrics. These include key nominal and growth metrics for revenue, operating earnings, operating margin, return on invested capital (ROIC), free cash flow (FCF), free cash margin (FCM), book-to-bill (BTB) ratio, employee productivity, and equity market performance.

About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries and territories, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s more than 200,000 professionals are committed to becoming the standard of excellence. For more information, please visit www.deloitte.co.uk.

DTTL Global Manufacturing Industry group
The DTTL Global Manufacturing Industry group is comprised of around 2,000 member firm partners and over 13,000 industry professionals in over 45 countries. The group’s deep industry knowledge, service line experience, and thought leadership allows them to solve complex business issues with member firm clients in every corner of the globe. Deloitte member firms attract, develop, and retain the very best professionals and instil a set of shared values centred on integrity, value to clients, and commitment to each other and strength from diversity. Deloitte member firms provide professional services to 78 percent of the manufacturing industry companies on the Fortune Global 500®. For more information about the Global Manufacturing Industry group, please visit www.deloitte.com/manufacturing.

Member of Deloitte Touche Tohmatsu Limited.

“Europe is a critical geographic region with European headquartered companies representing nearly 35% of total global A&D revenues.” - Tom Captain, A&D Sector Leader, Deloitte Global.
 

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