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Defense Spending to Remain Under Pressure

The ShinesRooms.com Provides Stock Research onGenCorp Inc. and Boeing Co.

New York City, New York - The last two years have been challenging for aerospace and defense companies such as Gencorp Inc. (GY), and The Boeing Company (BA) as military spending in U.S. and Europe has declined. The trend is likely to continue in 2013. However, The Boeing Company has benefited from increasing demand for commercial aircraft. The U.S. and many European countries have been grappling with very high fiscal deficit over the last few years. The fiscal deficit situation in the U.S. was made worse by the financial crisis as the government had to implement expansionary fiscal policy measures to pull the economy out of a recession. In Europe, several countries have been struggling with high fiscal deficit. High fiscal deficit has meant that the U.S. and Europe have had to scale back their spending on military over the last two years. This trend is likely to continue.

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Defense companies are also evaluating the impact of Sequester on their businesses. Earlier this month, lawmakers in Washington DC failed to reach an agreement on reducing U.S.’s mounting fiscal deficit. As a result, the Sequester, or automatic spending cuts, worth $85 billion took effect in March. Half of the spending cuts will be made in defense. The U.S. government is the biggest customer for aerospace and defense companies, and therefore a scale back in defense spending is likely to have a significant impact on top-line growth at aerospace and defense companies such as Gencorp Inc. and The Boeing Company. Our free research report onBoeing Co.can be downloaded upon registration at


With defense spending in U.S. and Europe likely to remain under pressure, consolidation is probably the way forward for the aerospace and defense industry. An effort was already made last year when BAA and EADS announced a merger. However, the merger was blocked by the German government in the end.

Last month, Gencorp Inc. reported its financial results for the fourth quarter and fiscal year ended November 30, 2012. For the fourth quarter, the company’s net sales were $298.2 million, up from $252.2 million reported for the same period in the previous fiscal year. The company’s net income for the quarter was $2.8 million, or $0.05 per share, compared to $0.5 million, or $0.01 per share, reported for the same period in the previous year.GenCorp Inc.free research is available today at


Scott J. Seymour, President and CEO of Gencorp Inc., noted that growth in sales and backlog continued to record levels in 2012.

Conversely, The Boeing Company reported its fourth quarter financial results back in January. The company’s earnings for the fourth quarter fell 30% although it saw a sharp rise in commercial aircraft deliveries during the quarter. The Boeing Company reported earnings of $978 million for the quarter, compared to $1.39 billion reported for the same period in the previous year. The company’s commercial aircraft deliveries rose 29% in the quarter.

Jim McNerney, Chairman, President and CEO of The Boeing Company noted that strong fourth quarter operating performance capped a year of significant growth and solid execution.

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