Press release

23 Oct 2020 London, GB

Record-level of profit warnings reveals the impact of COVID-19 on the Aerospace & Defense sector

FTSE Aerospace & Defense companies issued a record-breaking 12 profit warnings in the nine months to the end of September – more than any other year on record, with 11 out of the 12 warnings citing the impact of COVID-19

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  • The FTSE Aerospace & Defense sector recorded more profit warnings (12) in the first nine months of 2020, more than the last three years combined
  • The number of profit warnings issued by FTSE Aerospace & Defense so far in 2020 is higher than any year on record

London, 23 October 2020. The Aerospace & Defense sector issued more profit warnings in the first nine months of 2020, than the previous three years combined, according to EY’s latest quarterly analysis of UK profit warnings.

FTSE Aerospace & Defense companies issued a record-breaking 12 profit warnings in the nine months to the end of September – more than any other year on record, with 11 out of the 12 warnings citing the impact of COVID-19

Matt Ward, EY’s Aerospace & Defence Leader, comments: “Reduced demand for new aircraft and substantially reduced flight cycles continue to affect both manufacturers and maintenance organisations alike. This impact, compounded by pre-existing headwinds such as the grounding of the 737Max, is likely to have a lasting effect on the sector.

“The civil market remains most affected. Defence companies have seen a limited impact so far. But this may change as supply chains display signs of distress and as existing affordability questions are compounded by governments contemplating deficit-related defence spending cuts. The depth and duration of market contraction will force the industry to consolidate supply chains.”

According to EY’s report, the total number of profit warnings issued by all UK quoted companies by the end of Q3 2020 was 524, setting a new record for the annual total after only nine months. The previous record was 506 profit warnings in 2001.

Outlook for recovery

Looking to future, in a post COVID world, Ward added: “Fewer, stronger players will emerge on the other side, particularly those with a focus on quality and delivery, investment in emerging technologies and those that embrace the new normal including more efficient ways of working, for example additive manufacturing, robotics and automation.”