A new Deloitte report indicates a 2.6 percent decrease in the defense sector’s total fiscal year 2013 revenue due to Defense Department-wide spending cuts last year.
Deloitte analyzed the performance of several defense contractors in the U.S. and found that profitability for U.S. defense vendors rose 17.9 percent despite the revenue drop, the company said Monday.
The report attributed the trend to the budget reductions under the Budget Control Act of 2011 and the withdrawal of U.S. troops from the Middle East.
“We anticipate that U.S. defense contractors will aggressively address this revenue shortfall with foreign military sales, acquisitions, new product introductions and growth in adjacent markets, ” said Tom Captain, vice chairman of Deloitte LLP and U.S. and global aerospace and defense lead.
Providers of ground equipment and onsite services saw the highest revenue fall while manufacturers of military aircraft and naval ships posted flat earnings, the report says.