Defense subsector expands, while Commercial Aerospace growth slows down
According to Deloitte Aerospace & Defense Financial performance study:
Global aerospace and 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 top 100 companies analyzed added US$15.7 billion in revenues, with growth primarily driven by the European commercial and US defense subsectors. In terms of incremental revenue growth by segment, the original equipment manufacturers (OEMs) and electronics segments were the top contributors, adding US$3.4 billion and US$3.7 billion respectively.
Here below you can find key insights
- Global aerospace and defense sector revenue growth is slowing, marginally outpacing global GDP growth
- European A&D sector revenue growth continues to outperform the US sector
- 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
- The OEMs and electronics segment experienced incremental revenue growths
- 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
- Sector productivity experienced a moderate improvement in 2016, led by strong growth in Europe
- 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