Lockheed Martin has transformed its business by capitalizing on growth opportunities in the aerospace and defense industry. By acquiring Sikorsky Aircraft in 2015, integrating advanced rotary-wing technologies, and optimizing operations through strategic synergies, the company expanded its portfolio and enhanced its competitiveness.
These efforts enabled Lockheed Martin to achieve significant improvements in performance, including a strengthened market position in the rotorcraft segment. By aligning with market demands and prioritizing innovation, Lockheed Martin has solidified its leadership in aerospace while establishing a robust foundation for sustainable growth and long-term success.
Lockheed Martin faced the challenge of maintaining its competitive edge and expanding its capabilities in the rapidly evolving aerospace and defense industry. The company recognized the need to enhance its portfolio with advanced rotary-wing technologies to meet the rising demand in military and civilian aviation markets. This strategic necessity led to Lockheed Martin’s acquisition of Sikorsky Aircraft in 2015, a move aimed at strengthening its position in the global helicopter market and improving its long-term performance.
Lockheed Martin addressed this challenge by acquiring Sikorsky Aircraft for $9 billion in 2015. This acquisition integrated Sikorsky’s renowned helicopter technologies and expertise into Lockheed Martin’s portfolio, enabling the company to provide comprehensive solutions across fixed-wing, rotary-wing, and unmanned aerial systems. Leveraging Sikorsky’s legacy in iconic platforms like the Black Hawk and CH-53, Lockheed Martin not only expanded its product offerings but also established a dominant position in high-demand military rotorcraft markets.
Post-acquisition, Lockheed Martin focused on achieving operational synergies by aligning Sikorsky’s manufacturing and engineering capabilities with its own systems integration expertise. This enhanced operational efficiency and improved production timelines. The company also capitalized on Sikorsky’s global customer base, expanding its market reach. These strategic actions significantly improved Lockheed Martin’s performance compared to competitors in the aerospace sector, positioning the company as a leader in the rotorcraft segment.
The acquisition of Sikorsky Aircraft proved to be a transformative move for Lockheed Martin. By incorporating Sikorsky’s advanced rotary-wing technologies, the company enhanced its portfolio, captured a larger share of the aerospace and defense market, and strengthened its leadership in the rotorcraft sector. The integration of Sikorsky’s operations improved efficiency, optimized resources, and met the increasing global demand for advanced helicopter platforms.
This strategic acquisition boosted Lockheed Martin’s overall financial performance, increasing revenues and profitability. Additionally, it positioned the company to outperform major competitors like Northrop Grumman, solidifying its status as a top performer in the defense industry. Sikorsky’s integration not only reinforced Lockheed Martin’s leadership in rotary-wing aviation but also established a strong foundation for sustainable growth and innovation in the aerospace market.
Lockheed Martin's strong ROIC and revenue growth, driven by strategic moves like the Sikorsky acquisition, have significantly outperformed industry peers between 2015 and 2019. Its EBIT margin and asset turnover ratio improved steadily, contrasting with declining metrics among competitors. Additionally, its stock price showed the highest increase during this period, reflecting the success of its strategies.
Lockheed Martin's ROIC has diverged significantly from its peer companies since 2015, driven by the synergy created by the Sikorsky acquisition. The company's ROIC increased from 7.8% in 2015 to 17.4% in 2019, while the ROIC of its peer companies declined from 8% in 2015 to 6.0% in 2019.
Source: FinancialCharts (Peers: General Electric, RTX Corp, General Dynamics Corp, Northgrop Grumman Corp)
The company's revenue growth index is also significantly higher compared to its peer companies in the industry. Access to Sikorsky's customers has further contributed to Lockheed Martin's revenue growth.
Source: FinancialCharts (Peers: General Electric, RTX Corp, General Dynamics Corp, Northgrop Grumman Corp)
When Lockheed Martin's stock price was indexed to 100 alongside its peer companies in July 2015, it became the company with the highest stock price increase during the period analyzed for the effects of the Sikorsky acquisition.
Source: Investing.com
Between 2015 and 2019, while the EBIT margins of peer companies in the industry declined, Lockheed Martin's strategic moves enabled an increase in its EBIT margin.
Source: CapitalIQ
When examining the asset turnover ratio, it is observed that the gap between Lockheed Martin and its peer companies in the industry widened in parallel with its ROIC performance. Lockheed Martin's asset turnover ratio increased from 0.94 in 2015 to 1.30 in 2019, while the industry average for peer companies declined from 0.67 in 2015 to 0.58 in 2019.
Source: CapitalIQ
