buglerbilly
07-04-10, 02:43 PM
Briefing: Major players look towards cash deployment to maintain growth
By Guy Anderson, Editor, Fenella McGerty, Defence Economics Analyst and Keri Wagstaff-Smith, Reporter
07 April 2010
Uncertainty during 2009 led defence firms to exercise highly conservative cash deployment strategies: the shoring up of liquidity was paramount.
Fitch argues that the strong liquidity and financial flexibility enjoyed by the global aerospace and defence (A&D) industry helped it to withstand the difficult economy in 2009, and the industry even improved its liquidity position during the year although this did cause an increase in total debt.
There are indications that such parsimony is easing, however. The upper echelons now appear to be looking towards cash deployment to maintain growth, albeit conservatively.
"Most of the companies we [Fitch Ratings] rate have indicated a desire to increase spending [on the acquisition of companies and assets] in 2010, but the focus is on smaller acquisitions to fill in technology or expertise gaps in their portfolios," Craig Fraser of Fitch Ratings informed Jane's .
"The companies in the sector generally have the liquidity to execute acquisitions without pressuring credit quality. The liquidity is coming from a variety of sources, including cash balances, cash flow, and available credit facilities. We also believe the capital markets are currently favourable for the A&D sector," Fraser added.
US defence primes (General Dynamics, Boeing, L-3, Raytheon, United Technologies, Rockwell-Collins, Textron, Honeywell, Lockheed Martin and Northrop Grumman) began 2009 with USD16.6 billion in total prime credit facilities; by October 2009 most facilities had been renewed and extended bringing the total up to USD17 billion.
226 of 1821 words
Copyright © IHS (Global) Limited, 2010
By Guy Anderson, Editor, Fenella McGerty, Defence Economics Analyst and Keri Wagstaff-Smith, Reporter
07 April 2010
Uncertainty during 2009 led defence firms to exercise highly conservative cash deployment strategies: the shoring up of liquidity was paramount.
Fitch argues that the strong liquidity and financial flexibility enjoyed by the global aerospace and defence (A&D) industry helped it to withstand the difficult economy in 2009, and the industry even improved its liquidity position during the year although this did cause an increase in total debt.
There are indications that such parsimony is easing, however. The upper echelons now appear to be looking towards cash deployment to maintain growth, albeit conservatively.
"Most of the companies we [Fitch Ratings] rate have indicated a desire to increase spending [on the acquisition of companies and assets] in 2010, but the focus is on smaller acquisitions to fill in technology or expertise gaps in their portfolios," Craig Fraser of Fitch Ratings informed Jane's .
"The companies in the sector generally have the liquidity to execute acquisitions without pressuring credit quality. The liquidity is coming from a variety of sources, including cash balances, cash flow, and available credit facilities. We also believe the capital markets are currently favourable for the A&D sector," Fraser added.
US defence primes (General Dynamics, Boeing, L-3, Raytheon, United Technologies, Rockwell-Collins, Textron, Honeywell, Lockheed Martin and Northrop Grumman) began 2009 with USD16.6 billion in total prime credit facilities; by October 2009 most facilities had been renewed and extended bringing the total up to USD17 billion.
226 of 1821 words
Copyright © IHS (Global) Limited, 2010