Despite a nominal increase in sales, the top 20 global aerospace and defence companies experienced declining financial performance in the first quarter of 2009 compared to 2008.
According to a new report, Throttling back: Midyear outlook for the global aerospace and defense industry, by Deloitte's global manufacturing industry group, based on 2009 first quarter financial reports and public documents, sales revenue growth fell 83%, down from 10% to 1.7%, operating profits decreased 12%, and operating margins declined by 13.9% [1]. Although the global industry capped off a record-setting five-year period in 2008, with strong growth in sales revenue of 7.9% to $595 billion and earnings of $54.2 billion, the first quarter of 2009 experienced negative financial performance.
The commercial aircraft sector suffered a dramatic decrease in orders, business jet manufacturers are in financial stress, and military equipment spending, led by the US Department of Defence, is moderating.
UK Manufacturing industry leader David Raistrick said: "Following its record setting period of growth, it is evident that the global aerospace and defence sector is not immune to the downturn and now faces a difficult future. Given the challenging economic environment, the sector will be forced to set priorities and make difficult trade-offs about what programs they can really afford. Despite the negative outlook, aerospace and defence is in a relatively better position to weather the economic storm than other industries. By focusing on product innovation, process improvements and new revenue opportunities, A&D companies will be better placed to take advantage of an economic turnaround.
"In the UK, the aerospace and defence industry has reported recently that they are holding their own in these challenging times. However, it remains cautious on the outlook for the next three years citing the need for more collaboration between industry and Government to support investment for both research and development, and training and skills, so that the UK can remain competitive amongst the leading global players."
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