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Defense Industry Survives 2012, More Challenges Ahead

Maintaining Profitability as Revenues Slow will be Primary Challenge

Boston, MA - February 20, 2013 - Following a sustained period of growth, revenues as well as profitability dropped for the defense industry in 2009, potentially marking the beginning of a downwards spiral. However revenues stabilized in 2010 and increased year-on-year in 2011: The Strategy Analytics Advanced Defense Systems (ADS) service reports, "Defense Industry Performance Profiles," (Parts 1 - 4) show revenue growth and profitability continuing to be maintained in 2012, with 2 percent year-on-year growth in both areas, despite the uncertainties surrounding sequestration and the "fiscal cliff" in the US as well as budget uncertainties in European and other international markets.

The series of reports bring together strategic analysis and commentary on twenty of the world’s major defense industry focused companies. The reports outline financial performance covering 2007-2012 and discuss activities within the defense sector, highlighting core strengths, perceived weaknesses and overall competitive positioning in the market.

"A mixed portfolio with commercial areas supplementing defense revenues was the formula for the revenue-leaders in 2013 with Boeing, EADS and United Technologies leading the pack," noted Asif Anwar, Director of the ADS service at Strategy Analytics. "From a more defense-orientated perspective, Lockheed Martin, BAE Systems, Northrop Grumman and Raytheon all featured in the top ten companies that generated over $440 billion in combined revenues in 2012."

"The combined profit margin for the twenty companies covered in this report averaged around 5 percent. Moving into 2013, maintaining profitability will be the challenge for the industry especially if revenue growth starts to stall," observed Eric Higham, ADS Service Director North America. "Advanced radar, communications and EW systems and the challenges of maintaining integrity in the network and protecting the users, platforms, systems and devices operating in a net-centric environment will provide fresh avenues of opportunity in 2013."    


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Asif Anwar
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