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Report: Industry financials likely flat

Report: Industry financials likely flat
An F-22 Raptor aircraft peels away to land while an F-15 Eagle aircraft flies the approach at Nellis Air Force Base, Nevada on July 16, 2010. The aircraft are from the U.S. Air Force Weapons School, 433rd Weapons Squadron. UPI/Kevin J. Gruenwald/U.S. Air Force | License Photo

WASHINGTON, Jan. 26 (UPI) -- Deloitte LLP, the U.S. risk management and consulting firm, forecasts a likely flat financial performance for the aerospace and defense Industry.

A report from Deloitte -- "Aerospace and Defense 2011 Outlook" – says the likelihood of flat financial performance stems from the continued effects of expected defense spending cuts and the slow recovering economic cycle offset by an uptick in commercial aerospace.

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The analysis states that for many defense firms the new market realities will require innovation, risk taking and bold moves to continue growth in revenues and profitability.

However, there are several areas for growth in critical emerging and growing product segments, including cybersecurity, intelligence, surveillance and reconnaissance, defense electronics, precision targeting and response, remote controlled platforms, directed energy, data fusion and energy security.

Given the slowdown in U.S. defense spending, the report suggests that contractors consider how to replace revenues in areas such as foreign military sales, growth in adjacent markets and through gap-filling and scale-building acquisitions.

"Continued threats in the Middle East, North Korea, Iran and other places, plus the significant military procurement decisions being made in Saudi Arabia, India, Brazil and the (United Arab Emirates), will likely provide defense contractors with opportunities to win new business," said Chuck Wald, a retired Air Force general and senior industry adviser for Deloitte.

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