Our recent study, A&D year in review and 2012 forecast analyzes the path the aerospace and defense (A&D) industry took through the recent year and provides an outlook at this year's performance. The A&D industry delivered its best year ever in 2011 on the strength of a surging commercial aviation market that more than offset a soft defense performance. For 2011 the top 100 A&D companies reported record setting operating profits. Revenue was higher by 5% compared with 2010, while operating profit was up 2% over 2010. During the past decade, the A&D industry has demonstrated a more disciplined management approach through economic cycles, which has resulted in steady revenue and earnings growth and culminated in back-to-back record years.
As we look ahead, we expect continued growth in commercial aerospace resulting from strong and steady demand for global aviation and increased commercial aircraft production. Conversely, defense revenues should continue to trend modestly lower, but recent cost-cutting actions should mitigate the impact to company bottom lines. While revenue is expected to rise for the sector overall, there is a significant risk that return on sales could drop due to supply chain inefficiencies. However, in the end, we believe that this industry should report another strong year in 2012, and quite possibly another record.