Northrop Grumman Corporation - Company Strategy & Performance Analysis
Northrop Grumman Corp. is a leading provider of defense equipment and solutions with high sales turnover. The company consists of diverse product lines in C4ISR, Strike, Cyber, Autonomous Systems, Logistics and Modernization sectors. The recent re-alignment of their business group includes Aerospace Systems, Mission Systems and Technology Services for higher operational excellence and improved productivity. The company has its operations in more than 25 countries with 67,000 employees, offering products and services to foreign, state and local governments as well as commercial customers across North America, Europe, Middle East and Asia-Pacific.
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Northrop Grumman is an innovative and high technology driven company:
The company’s main focus is on developing innovative and advanced technological solutions to support changing customer requirements. Its uniquely designed low cost products boost the company’s overall performance. The company invests a significant amount of its total revenue into research and development activities to acquire technological components and develop reusable product lines. In 2016, the company spent US$705.0 million on its R&D activities to strengthen its innovative capabilities and expand its product portfolio.
The company reported improved financial and operating performance:
Northrop Grumman reported an improved financial performance during the historic period. The company’s total revenue increased by 4.2%, from US$23,526.0 million in 2015 to US$24,508.0 million in 2016. Revenue growth was primarily driven by an 8.9% increase in revenue from the Aerospace Systems segment, and 2.4% from the Mission Systems segment. The company’s operating income increased by 3.8%, from US$3,076.0 million in 2015 to US$3,193.0 million in 2016. Similarly, its net income increased by 10.6%, from US$1,990.0 million in 2015 to US$2,200.0 million in 2016.
The company aims to increase capital investments and its financial sustainability:
The company increased its financial strength and focused on financial sustainability through share repurchases and raising dividends to support increased programmatic requirements. It improved its market value with increased diluted earnings per share and a reduction in weighted average shares outstanding. In 2016, diluted earnings per share increased at 17.3%, from US$10.4 in 2015 to US$12.2 in 2016. This increase was mainly due to a reduction in the outstanding shares resulting from share repurchases by the company.