PwC reported that A&D companies posted a combined operating profit of $77 billion in 2017 with an on operating margin of 10.6 percent, up from 9.3 percent in 2016.
The professional services firm predicts the defense industry will continue to experience accelerated growth in revenue and profit this year driven by defense spending increases as reflected in the omnibus spending measure that President Donald Trump signed in March.
PwC said the top six defense contractors in the U.S. posted a 3 percent rise in profit and revenue in 2017.
The report cited several mergers and acquisitions in 2017 and early 2018 that sought to consolidate government services businesses and realign portfolios.
Those M&A deals include General Dynamics’ (NYSE: GD) $9.7 billion purchase of CSRA; Veritas Capital’s acquisition of PwC’s U.S. public sector arm; and DXC Technology’s (NYSE: DXC) spinoff and merger of Perspecta with Vencore and KeyPoint Government Solutions.
The report offered updates on several defense programs, such as the F-35 fighter jet, B-21 bomber and T-X trainer aircraft.
Some of the industry players mentioned in the report include Boeing (NYSE: BA), Lockheed Martin (NYSE: LMT), Leidos (NYSE: LDOS), Raytheon (NYSE: RTN), Northrop Grumman (NYSE: NOC), BAE Systems, Leonardo and Thales.