Boeing Revenue Grows As Defense Industry Profits Retreat

   Despite cuts in defense spending, several weapons and aircraft makers have reported a double growth in revenues. Boeing leads the competition with a 20.8 $ increase followed by Safran and EADS with 14.3% and 14% growth respectively.

Lockheed Martin also made the winners cut, despite reports of several technical problems with its fighter jets and loss of sales, with a mere 2.3% increase.

After a decade-long surge in military spending, defense contractors now feel the pinch as annual defense budgets wane in the wake of two winding wars in the Middle East.

According to a study published by Deloitte, revenues of the world’s leading arms makers like BAE Systems, Bombardier Aerospace, Northrop Grumman and Finmeccanica have dropped by more than 1% between January and June of last year. This contraction followed a 2011 decline in revenues of more than 3%. Deloitte said that they are likely to decline over the rest of the year as governments continue to cut spending.

Finmeccanica, General Dynamics and L-3 Communications took the biggest hits with -0.6%, -0.4% and -0.3% in losses respectively.

Since 2002, total arms sales among the 100 largest arms manufacturers had increased by 60 percent reflecting the decade-long trend of military spending. In 2010, global sales of arms and military services by the 100 largest defense contractors increased to $411.1 billion.

Tom Captain, head of Deloitte’s global aerospace and defense analysis division said that the global defense industry will probably continue to contract for the foreseeable future. He added that there isn’t enough work to sustain the current budgets, so these firms will need to begin reallocating their budgets to the commercial sector to encourage future growth.

Meanwhile, the study found that commercial revenues have increased as more companies are producing aircraft than ever before allowing most aircraft-makers to maintain higher overall revenues over the course of the last year.

Deloitte also found that countries like Saudi Arabia, Israel, U.S, Russia, South Korea and UK placed among the countries with the highest military expenditures as percentage of GDP. India placed at seventh position with 2.6% followed by Turkey, France and China with 2.3%, 2.2%, 2.0% respectively.