Defense Industry Business Confidence Report – H1 2016

1 Introduction

1.1. Definitions and abbreviations

1.2. Methodology and sample size

1.3. Respondent profile

2 Economic state, growth prospects and customer confidence

2.1. Existing economic environment

2.1.1. Over one-third of respondents highlight the current global economic conditions as stable

2.1.2. In total, 43% of industry executives indicate favorable or very favorable economic condition in North America

2.1.3. Respondents who operate in North America and Asia-Pacific have more favorable opinion about their region

2.2. Industry and company growth outlook

2.2.1. The majority of respondents expect an optimistic outlook for company and industry growth prospects in H1 2016

2.2.2. Overall, 29% of industry executives are neither optimistic nor pessimistic over growth prospects for the industry in H1 2016

2.2.3. Positive outlook towards company growth is highest among respondents with business operations in Asia-Pacific

2.3. Expected change in customer confidence

2.3.1. In total, 54% of executives project positive or very positive change in customer confidence over the next six months

2.3.2. The majority of respondents with business operations in Asia-Pacific and Europe anticipate a significant increase in customer confidence in H1 2016

3 Supplier prices, staff headcount and sales performance

3.1. Supplier prices expectations

3.1.1. Overall, power and energy is anticipated to record the highest increase in supplier prices in the next six months

3.1.2. On an average, defense industry respondents project an increase of

3.0% in supplier prices for technology during H1 2016

3.1.3. Over one-third of defense industry executives foresee an increase of

0.1% to

3.99% in supplier prices for power and energy during the next six months

3.1.4. The majority of respondents anticipate an increase of

0.1% to

5.99% in supplier prices for equipment and components in H1 2016

3.1.5. Defense industry executives with business operations in North America project highest growth in sales during the next six months

3.1.6. Expenditure will increase on new product development and, mergers and acquisitions in H1 2016

4 Business concerns and organizational priorities

4.1. Level of concerns and expected impact

4.1.1. Economic, industrial, and societal issues can adversely impact business prospects, limit profitability and force changes in existing business strategy

4.1.2. Executives who operate in North America highlight cyber crime as the biggest concern for H1 2016

4.1.3. Respondents operating in the Rest of the World are most concerned about social unrest in countries of operation during the next six months

4.1.4. The levels of defense buyers' confidence and the performance of North American economies are the key concerns for defense executives

4.1.5. The majority of defense industry survey respondents are concerned over cyber crime and social unrest in country/countries of operation in H1 2016

4.2. Significance of potential business priorities

4.2.1. Globally, operational efficiency and customer retention are the most preferred priorities for defense executives

4.2.2. Executives operating in Europe and Asia-Pacific are least focused on corporate and social responsibility initiatives in H1 2016

4.2.3. Improving operational efficiency and customer retention are the two most preferred priorities for global defense industry over the next six months

5 Appendix

5.1. About SDI

5.2. Disclaimer