Revenues within the military shipbuilding industry have been forecast to increase at an annualised rate of 2.9% over the next five years, reaching a value of $48.5 billion by 2018.
Despite the massive effect of the global recession on builders of commercial aircraft and ships, companies primarily involved in the building of their military equivalents fared considerably better.
The national security considerations of governments and long-term planning undertaken for military expenditure have ensured that revenue for the military shipbuilding industry has been relatively stable.
Growth over the past five years has been primarily attributed to the demand for military ships and boats to protect coastal waters and to expand and renew navy fleet sizes. The contributions to industry revenue are particularly strong from North America, Europe and North Asia.
In 2013, industry revenue is expected to grow about 2.3%. However, government military budgets are forecast to keep revenue growth steady, as shipbuilding budgets were not the object of major cuts.
However, profit margins declined slightly in the aftermath of the global downturn. Customer countries burdened with high levels of government debt started cutting defence spending, which put pressure on industry margins.
Nevertheless, the industry was able to reclaim previous profitability levels through capacity cuts. Profit margins are expected to remain stable over the next five years due to the stability of military demand and naval spending.
The increase in revenue will stem from stable growth in defence budgets, particularly in the United States, and a focus on advanced electronics and information systems capabilities.
Heightened demand is expected to lift industry profit. However, increasing program collaboration between allied nations will put downward pressure on industry margins.
For more information on the military shipbuilding market, see the latest research: Military Shipbuilding Market
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