ALEXANDER CAMPBELL / LONDON
Results show Europe's smaller manufacturers faring better than primes in downturn, boosted by defence spending
Europe's second-tier aerospace contractors appear to be weathering the industry downturn better than their larger counterparts.
Although many smaller manufacturers have been hit by the slump in civil aircraft deliveries, a series of results suggest that government spending on defence and the growing security market have helped offset the downturn.
Second-tier suppliers benefit from the fact that they incur less risk on major programmes. While they lack the multi-billion dollar contract wins of the primary manufacturers, they are also less likely to suffer crippling losses in a downturn.
With cash flow from the military and security markets fairly secure, analysts predict there will be more consolidation among the second-tier suppliers.
Ultra Electronics of the UK maintained profits and sales growth in 2002 on the back of several defence contracts. The company's revenue rose by 9% to £260 million ($414 million) and pre-tax profit was up by 11% to £30 million.
French manufacturer Sagem saw revenues fall slightly, but sales of avionics and security products were up: avionics and optronics sales rose 7% to €443 million ($476 million), and security was up 37% to €343 million.
Meanwhile, Netherlands-based Stork saw little change in aerospace revenues, which are down to €411 million from €421 million in 2001.
However, the company was hit by the termination of the Fairchild Dornier 728 regional airliner programme, forcing it to make a major one-off provision against its contract to supply the wiring system.
Source: Flight International
