Following the recent news (Tuesday 22 October) of Lockheed Martin’s Q3 earning results showing a 13% year-on-year sales growth;

Nicolas Jouan, Defense Analyst at GlobalData, a leading data and analytics company, offers his view on the company’s good results:

“The good results of Lockheed Martin in 2019 Q3 are no surprise to anyone observing the American defense market. The company will capture around one third of major weapons platforms procurement next year, including almost two thirds of fixed-wing and rotor-craft procurement, according to GlobalData estimates.

“Lockheed Martin’s domination over the fixed-wing market owes a lot to its flagship program, the fifth-generation F-35 Lightning II. The excellent sales figures of the F-35, accounting for most of the company’s US$137.4bn backlog, stands on two pillars: a strong home market and growing international sales. The F-35 attracts the interest of US allies such as Belgium or Japan who try to balance rising Russian and Chinese assertiveness in the sky.

“Nevertheless, the company cannot eternally rely on its successful platform. The Pentagon keeps postponing full-rate production, which will negatively impact economy of scale and slow down unit price reduction targets. Furthermore, development of sixth-generation fighters is already making the headlines in Europe with the British Tempest and the Franco-German FCAS program, while Boeing is thinking about the F/A-18 replacement.

“Lockheed Martin’s top position in the fixed-wing market will not be easily challenged, but the future also resides in hypersonic technologies, which are increasingly taking the upper hand and threatening to offset the F-35’s capabilities. In that context, missiles and fire control projects, which grew their sales by 21% since 2018 Q3, are likely to increase their share in Lockheed Martin’s overall sales.”