The aerospace and defence industry experienced a record year in 2011 driven by a surging commercial aviation market, according to a PwC report.
The Aerospace & Defence 2011 year in review and 2012 forecast report found that In 2011, the Top 100 A&D companies reported $677bn in revenue, a 5% increase compared to the previous year, and $60bn in operating profit, an increase of 2% from 2010.
Neil Hampson, global aerospace and defence leader, PwC, said: “This year we expect continued growth in commercial aerospace resulting from strong and steady demand for global aviation and increased commercial aircraft production. Conversely, defence revenues should continue to remain low, but recent cost-cutting actions should mitigate the impact on company bottom lines.”
Mr Hampson warned against supply chain inefficiencies, which could cause sales to drop.
Commercial aerospace companies predominantly reported strong revenue growth and delivered a record number of large aircraft in 2011, exceeding 1,000, driven by a record backlog and increasing production rates. The strong order activity was largely led by the launch of two new single-aisle aircrafts, the A320NEO and 737MAX.
Hampson continued: “2012 is already off to a great start, but the industry will continue to face challenges such as rising production rates, raw materials shortages and late deliveries. Despite these issues, times are good for the sector.”
One area of opportunity for defence contractors has been exports, where growth led to a record backlog of $327bn at mid-year 2011. However, defence companies continue to face more pressure than ever to improve productivity, increase transparency and respond to increasingly complex government regulations.
“The industry also needs to recognise the value of innovation and research and must invest in knowledge retention and training,” added Hampson.
In 2011 there were 341 deals and a total value of $43.7bn recorded in the sector.
Photo by Axel Schwenke
