Today: November 28, 2015, 5:41 pm

Global military shipbuilding market: $48.5 billion industry forecast by 2018
Global Military Shipbuilding & Submarines - a new market research report on 2014-03-25 04:27:02
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 Global Military Shipbuilding and Submarines industry has been relatively stable.

IBISWorld expects that industry revenue will increase at an annualized 1.4% in the five years through 2013 to reach $42.0 billion. This growth is 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.

Profit margins have been relatively stable for the Global Military Shipbuilding and Submarines industry over the past five years, stemming from the contractual and long-term nature of ship builds. However, profit margins declined slightly in the aftermath of the global downturn. Customer countries burdened with high levels of government debt started cutting defense 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.

Revenue is projected to continue growing in the five years through 2018 at 2.9% per year on average to $48.5 billion. The increase in revenue will stem from stable growth in defense budgets, particularly in the United States, and a focus on advanced electronics and information systems capabilities. IBISWorld also anticipates an increase in naval manufacturing in emerging countries. Heightened demand is expected to lift industry profit. However, increasing program collaboration between allied nations will put downward pressure on industry margins. Allied nations will expand collaboration in naval purchasing programs to share the risk linked to new developments.

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