EADS now globe’s biggest A&D company by revenue


A new Deloitte study has found that EADS is now the world’s largest aerospace and defence (A&D) company in terms of revenue. It has edged out Boeing that held the top spot before.

BAE Systems is in fifth place.

Both companies have a significant presence in SA.

“EADS` strong 2008 revenue performance is attributable to higher deliveries of commercial aircraft, helicopters, higher sales of commercial satellites, and revenue growth in its defense programs,” the report said. The pan-European giant`s subsidiaries include planemaker Airbus and helicopter builder Eurocopter.    

Deloitte studied the 2008 financial performance of 67 A&D companies that posted sales revenue of $1 billion and above, assessing their key performance metrics in terms of revenue growth, operating earnings and margin, asset effectiveness, cash generation as well as sales bookings.

The study found that 2008 was a record setting year, outpacing 2007 in terms of industry profits and revenue. The study found industry revenue increased by 7.9% to $595 billion, while operating earnings jumped 9.5% to $54.2 billion and operating margins increased by 1.5% to 9.11%.

On the other hand, the global industry`s return on invested capital (ROIC) decreased from 12.85% to 11.79% and their free cash flow (FCF) also decreased, from $44.9 billion to $36.9 billion, for a 17.7% decrease, principally due to the deteriorating condition of the overall market in the last quarter of 2008.

Their book to bill (BTB) ratio, a key in determining future sales revenue health, decreased from 1.50x to 1.33x, for a 10.9% decrease, due to the same deteriorating conditions.

“Finally, after several years of gains that outpaced the standard equity indices, the combined share prices for the U.S. companies fell further than the S&P 500 benchmark, while the combined share prices for the European companies lagged the Dow Jones (DJ) Stoxx index despite a strong performance in the first half of the year,” the report noted.

Deloitte added that financial performance per company varied depending on subsector and region.