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TOP 100SPECIAL REPORTTOP 10034 Flight International 24-30 September 2013flightglobal.com
TOP 100SPECIAL REPORTDAN THISDELL LONDONFor several years since the financial crisis struck in 2008, merger and acquisition activity has been relatively subdued. That’s not surprising given theeconomic backdrop, but the assumption hasprevailed that the aerospace industry is ripefor consolidation, especially in terms of thesupply chain.However, as shown by our latest Top 100analysis of industry leaders – compiled, asever by the experts at PwC – 2012 was in facta year of buoyant deal activity. Boeing, for example, completed acquisitions totalling 124million and Lockheed Martin splashed out 304 million. Smaller companies were alsohighly active. Indications from the wider corporate world suggest that, in recent months,the M&A market is finally loosening up. Withcompanies sitting on large cash piles after several years of record profits, aerospace couldwell be in for a flood of dealmaking.Next year’s Top 100 may, then, look quitedifferent. Watch, especially, for companieswith heavy exposure to military budgets inNorth America and Europe look to M&A fordiversification, into civil aerospace as well asrelated-technology fields like cybersecurity.However the industry shakes out, though,one fact shines through this Top 100 analysis;profitability is strong and settling down at alevel above historical norms. With aviationgrowing consistently faster than the globaleconomy, good times in aerospace look likelyto continue for the foreseable future. To view our full list of the Top 100 aerospacecompanies, including revenue and profitfigures, visit flightglobal.com/top100Our Top 100 analysis of aerospace industry2012 financial performance sees no change inthe top 10, but a number of new names – fromChina and Russia, and from acquisition-drivenreshuffling that may herald shifts to comeflightglobal.com24-30 September 2013 Flight International 35
TOP 100BoeingSPECIAL REPORTAt number-one Boeing, 787 production is starting to humBOEINGEADSLOCKHEED MARTINRevenue: 81.7 billionProfit: 6.31 billionThe world’s biggest aerospace companygot a lot bigger in 2012 – revenue grew18.9% on 36% growth in airliner salesRevenue: 74.8 billionProfit: 2.82 billionAt 15%, revenue growth was strong, andprofitability was also on the up. A yearfrom now the group will be called AirbusRevenue: 47.2 billionProfit: 4.43 billionAs a very defence-focused businesshomed in a budget-slimming USA, it isno surprise sales were up just 1.5%UNITED TECHNOLOGIESGENERAL DYNAMICSRevenue: 29.1 billionProfit: 3.25 billionThe Pratt & Whitney and Sikorsky parentgrew 17.2% due in large part to its acquisition of Goodrich, ranked 18th in 2011Revenue: 31.5 billionProfit: 833 millionSales dipped by 3.6% in 2012, which is no surprise given GD’s heavy exposure to USmilitary budgets. Total revenue is on track for negative growth again this year, but thebusiness jet market is another story – in the half to end-June 2013, orders were takenfor every Gulfstream model, and aerospace segment sales gained nearly a fifthNORTHROP GRUMMANG650: business endof a good businessRevenue: 28.1 billionProfit: 2.83 billionGrowth of 6.6% reversed a fall in 2011;first half 2013 sales were flat, and thebacklog dipped with US federal spendingRAYTHEON36 Flight International 24-30 September 2013BillypixRevenue: 24.4 billionProfit: 2.99 billionAnother heavyweight with big exposureto defence budgets, sales dipped 1.5%in 2012; the forecast is -3% this yearflightglobal.com
TOP 100SPECIAL REPORT 3GENERAL ELECTRICSAFRANROLLS-ROYCERevenue: 20.0 billionProfit: 3.75 billionA solid performer that may be set for asurge; Avio engines acquisition will showin 2013, and structures is a rising starRevenue: 15.9 billionProfit: 1.92 billionSystematic innovation and a solid driveinto security complement long-termsuccess of CFM venture with GERevenue: 13.7 billionProfit: 1.75 billionDouble-digit sales growth may wellcontinue owing to strong positions on787 and A350FINMECCANICARevenue: 20.2 billionLoss: 192 millionThe Italian industrial champion saw salesedge down nearly 2%, but it slashed aerospace losses from 2.22 billion to less thana tenth of that. The result was a relief aftera miserable 2011, when a 753 million( 998 million) charge against faulty aerostructures it supplies to the Boeing 787helped spark a major, and ongoing, corporate restructuring. Aerospace sales are stilltrending downward, but the AgustaWestlandhelicopters business looks to be on a rolldespite an exports to India corruption probethat has cost management scalpsAugusta WestlandAgustaWestlandis a star 1 1HONEYWELLBAE SYSTEMSRevenue: 12.0 billionProfit: 2.28 billionWith its operating margin of 15.6%, thefuel to component systems group is byfar the most profitable of the big playersRevenue: 8.73 billionProfit: not availableHeavy exposure to US and UK military sales keeps life interesting at BAE, but the UKarm of the Eurofighter consortium leads the lucrative Saudi Arabia export deal 4The Eurofighter is amajor focus for BAEL-3Revenue: 11.8 billionProfit: 1.27 billionSales edged up 1.8% in 2012; first-halfgains were slimmer this year, but newcontract signings are encouraging 1TEXTRON38 Flight International 24-30 September 2013Geoffrey Lee EurofighterRevenue: 9.12 billionProfit: 853 millionFor the Bell helicopters and Cessnabusiness jets maker, 8.8% growth showsreturn to stability after tough few yearsflightglobal.com
TOP 100SPECIAL REPORT 3-6BOMBARDIEREMBRAERRevenue: 8.63 billionProfit: 382 millionSales growth was barely positive andprofit meagre, but in CSeries and Globalrange, 2012 was marked by investmentRevenue: 6.18 billionProfit: 612 millionBrazil’s champion slipped down the table, but sales of its regional jets have beenstrong and some analysts are expecting a re-engined E-Jets range to propel Embraerinto the lead in that market, despite new competition from China and Japan-6THALESRevenue: 5.83 billionProfit: 393 millionProfitability remains a concern at theParis-headquartered avionics and electronic systems group 3Revenue: 5.47 billionProfit: not availableThe Portland, Oregon-based maker ofstructural castings and aerostructuresracked up 22.5% revenue growthFor short-haulefficiency,E is the way.EmbraerPRECISION CASTPARTS 1MITSUBISHI HEAVY INDUSTRIESRevenue: 5.53 billionProfit: 331 millionHeavy may seem like the wrong name for a regional jet maker, but the in-development MRJ programme is serious businessMitsubishi Heavy Industries.unless, of course,you prefer the big Mflightglobal.com24-30 September 2013 Flight International 39
TOP 100SPECIAL REPORTTOP 100As the chart on the right shows, the aerospaceindustry’s leading players appear to havereturned to a sales and profit performancepattern which bears at least some similarity tothe pre-crisis boom years of the mid-2000s. At8%, sales growth has returned to a level thatmight be described as robust – if not buoyant– and remains considerably higher than globalGDP growth, which with any luck will remain anindustry characteristic. While the 6% gain inprofits is an average which hides some negativeoutcomes, the average profit margin is settling ataround 9.4% – higher than in the 2000s, andsuggesting that companies are working smarterpost-crisis.REVENUE AND PROFIT GROWTH OF THE AEROSPACE TOP 100 2005-2012% growth3026%2017%13%12%8%8%5%5World GDP growth16%1510Profit GrowthRevenue Growth255%5%8%7% 720082009201020112012BillypixSOURCE: PwCThe Paris air show was a hotbed of industry activity this year, with big-money deals changing hands and orders fleshed outTOP 20 BY OPERATING MARGIN 2012Rank by Rank bymargin gm Group IncorporatedFLIR SystemsB/E AerospaceGarminHarrisMartin BakerHindustan AeronauticsCraneMeggittHoneywell InternationalGeneral ElectricHeicoRockwell CollinsCytecAlliant TechsystemsUltra ElectronicsKamanMDA communicationsWoodward 674SOURCE: PwC40 Flight International 24-30 September 2013TOP 20 BY SALES GROWTH .3%15.1%14.5%14.5%Rank byRank byGrowth % 9287100552216556885324635Salesgrowth (%)ElettronicaLISITransDigm GroupAVICZodiacSeniorPrecision CastpartsDoncastersAscoCircor InternationalKorea Aerospace IndustriesDassault AviationBoeingHeicoUnited TechnologiesCytecSKFAvioEsterlineKawasaki Heavy 15.9%15.8%SOURCE: PwCflightglobal.com
TOP 100SPECIAL REPORT 2SPIRIT AEROSYSTEMSDASSAULT AVIATIONRevenue: 5.40 billionProfit: 114 millionSales growth in 2012 of 11% was fair,but profits were grim and 2013 has seenlayoffs and site closuresRevenue: 5.22 billionProfit: 725 millionDassault Aviation is ever a story of two parts. Its Falcon business jets sit in the bigcabin market sector that has fared well through the downturn, but the product range isunder pressure from newer, faster, longer-range rivals. India’s choice of Rafale fighterswas an export sales triumph – or will be if and when Paris and New Delhi seal the deal 37X is the business, butDassault’s flagship isunder pressureZODIACRevenue: 4.56 billionProfit: 646 millionAt 25.8%, the Paris-based seatsand galleys maker is a Top 100growth star; 787 programme will bea cash cow 1MTU AERO ENGINESDassaltAviationRevenue: 4.48 billionProfit: 397 millionMTU is part of the V2500 narrowbodypower alliance and its successor, alongwith P&W and Rolls-Royce-1-1ROCKWELL COLLINSHARRISRevenue: 4.73 billionProfit: 859 millionSales edged down 1.7%, so much rides on civil business, but strength in communications systems mean retrofit prospects and a good chance of riding out US defence cutsRevenue: 3.99 billionProfit: 960 millionSecure communications systems,including for air traffic control 5ISHIKAWAJIMA-HARIMARevenue: 3.85 billionProfit: 176 millionSales growth of 13% for the maker ofCF34 and V2500 engine components 3For pilots, it’s Collinsevery step of the way42 Flight International 24-30 September 2013GulfstreamALCOARevenue: 3.80 billionProfit: not availableThe US aluminium giant saw newalloys keeping it competitive withcarbonfibreflightglobal.com
TOP 100SPECIAL REPORT 5 1TRIUMPHAVIORevenue: 3.70 billionProfit: 531 millionAfter 2011’s 1.44 billion acquisition ofVought made for 44% growth, Triumphhad to make do with 8.7% organicallyRevenue: 3.12 billionProfit: 291 millionThe Italian engine components maker’s private equity owners had been lining thecompany up for an IPO, but instead sealed a 4.3 billion deal that saw it go to GE ina trade sale earlier this year – GE’s numbers will rise accordingly when 2013’s figurescome through-1ISRAELAEROSPACEIt’s what’s insidethat countsRevenue: 3.40 billionProfit: 78 millionThe Israeli defence manufacturermanaged 3% growth but should be in agood position to grow export sales-3ALLIANTTECHSYSTEMSAvioRevenue: 3.21 billionProfit: 532 millionSales down 11.2%; solid rocket propultion, armaments, aerostructures 2HINDUSTAN AERORevenue: 3.10 billionProfit: 725 millionHAL is slowly, and very partially, beingfreed from New Delhi’s ownership 2ELBIT SYSTEMSRevenue: 2.89 billionProfit: 203 millionThe Israeli defence electronics maker isgrowing sales beyond the US and Israel 6Revenue: 2.75 billionProfit: 169 millionA long-time key structures partner forBoeing, also serves Embraerflightglobal.comJoint Strike Fighter24-30 September 2013 Flight International 43Lockhead MartinKAWASAKI HEAVYINDUSTRIES
TOP 100SPECIAL REPORT-2COBHAMEXELISRevenue: 2.70 billionProfit: 364 millionRevenue dipped for the second yearrunning, down 5.7% in 2012, but thebusiness is well diversified into servicesRevenue: 2.60 billionProfit: not availableThe former ITT aerospace business now sits alone – and has dropped the ITT from itsname. Products include command, control, communications, computers, intelligence,surveillance and reconnaissance (C4ISR) systems and information and technicalservices. The company supplies military, government and commercial customers in theUSA and globally; Exelis also supplies aerostructures to Airbus, Boeing and SikorskynewAVICExelis insideRevenue: 2.66 billionProfit: 201 millionAt last, reliable financial reports arebringing China into the Top 100; AVICeven makes the top 10 for growth 4MEGGITTSenior Airman Dennis Sloan USAFRevenue: 2.48 billionProfit: 500 millionThe systems maker has this year movedinto a new management era, with theretirement of popular boss Terry Twigger 2GKNRevenue: 2.45 billionProfit: 273 millionThis British industrial champion maybe best known as one of Airbus’s keysuppliers – it now owns the OEM’s wingcomponents plant at Filton, from where itsupplies spars and critical structures forA380, A350 and A400M – but it also hassolid positions on Boeing programmesincluding 787. With its 2012 acquisition of Volvo Aero, GKN is now one ofthe world’s leading engine componentsmakers. Composite technology is aparticular strong suit, and GKN also sitscomfortably on the defence side of thebusiness, with positions on major platforms that leave it relatively unaffected bymilitary spending cuts. On top of all that,the aerospace division has been a growthstar and is finally closing in on GKN’sbiggest unit, automotive drivelineKevin JacksonA380 wings, GKNmanufacturing44 Flight International 24-30 September 2013flightglobal.com
TOP 100SPECIAL REPORTTOP 20 SHARE OF TOP 100 PROFITS 2012Top 2077.3%Top 2072.1%The rest22.7%The rest27.9%Nobuo OyamaEurocopter EC225TOP 20 SHARE OF TOP 100 SALES 2012SOURCE: PwCSOURCE: PwCBoeingANA helped openthe 787 eraAVERAGE TOP 100 OPERATING MARGIN 2000-2012A400M: showerof expectations10%9%8%7%6%5%4%3%S Ramadier Airbus
Revenue: 4.56 billion Profit: 646 million At 25.8%, the Paris-based seats and galleys maker is a Top 100 growth star; 787 programme will be a cash cow Revenue: 4.48 billion Profit: 397 million MTU is part of the V2500 narrowbody power alliance and its successor, along with P&W and Rolls-Royce. 3 1.
