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Commercial sector shines for A&D industry

  |   June 5, 2013 at 2:00 PM
NEW YORK, June 5 (UPI) -- A surging commercial aviation market last year offset a soft defense sector, giving the aerospace and defense industry a bumper year, a U.S. report says.

PriceWaterhouseCoopers reported the top 100 A&D companies reported a record-setting $695 billion in revenue in 2012 and $59.8 billion in operating profit.

Revenue rose 4 percent compared with the previous year. Operating profit was up 2 percent from 2011 while the operating margin decreased 17 basis points to 8.60 percent.

The data does not take into account the acquisitions of Goodrich last year by United Technologies Corp. and GE Aviation's acquisition of Avio so the statistics "slightly understate the strength of commercial aviation earnings," it said.

The report says commercial aerospace companies continue to be optimistic about the future -- air traffic is robust and steady, driving the aftermarket business, while the industry increased large commercial aircraft output by 18 percent and captured more than 2,000 large aircraft orders for the second consecutive year and the third time in history.

"As a result, there's a record backlog -- more than seven years at current production rates," PriceWaterhouseCoopers said. "And the industry is anticipating another record output in 2013."

Defense companies, however, face an uncertain 2013 with U.S. defense spending curtailed by sequestration.

"Companies now are bracing for the consequences and waiting for details regarding the impact on specific programs," the report said. "Defense companies face more pressure than ever to improve productivity, increase transparency, and respond to increasingly complex government regulations and oversight."

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