The report -- "2010 Global Aerospace and Defense Industry Performance Wrap-up" -- analyzes the financial performance of global aerospace and defense industry companies with revenues exceeding $400 million.
It said revenues barely kept pace with inflation and industry experienced comparatively flat-to-modest increases in core operating profit, with non-recurring charges excluded.
Deloitte's analysis further reveals that most of the industry didn't boost sales orders sufficiently to replace sales revenue billings. Although backlog rebounded from 2009 levels, the industry experienced uneven growth with commercial aircraft orders gaining momentum while defense contractors struggled with a difficult budget environment.
"Flat results are not surprising given the tough economy," said Tom Captain, vice chairman, Deloitte LLP and global aerospace and defense sector leader. "Global defense contractors are experiencing new challenges in growing revenues and profits.
"Conversely, the commercial aerospace sector is pointing to higher revenues and profits moving forward, particularly as business and personal travel rates continue to climb, especially in the emerging global economies."
Other Deloitte's findings:
-- Reported operating profit increased by 24.9 due primarily to nominal one-time charges of $1.7 billion in 2010 compared to $10.5 billion in 2009.
-- Core operating margins of 8.9 percent represented an increase of 2.9 percent, or 26 basis points, although reported operating margins increased by 23.0 percent, or 162 bps, as a result of the virtual absence of large, non-recurring charges to earnings in 2010 relative to 2009.
-- Core revenues of U.S. companies grew faster in 2010 than their European counterparts with U.S. revenues growing 1.9 percent in 2010 versus 0.9 percent growth among European companies.
U.S. companies in this study were also more profitable than European companies with reported operating margins of 10.5 percent compared to 6.0 percent.
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