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Transportation Market Sees Boom in Commercial Aircraft

By Dave Pheteplace | August 11, 2014

Soaring air travel and aging fleets will continue to drive demand for narrow body and regional jets, continuing the boom in commercial aircraft.

girl-airplane-300x300Bishop tracks 13 companies in the transportation market sector. This market has been growing, as measured by these 13 company’s revenues, in the last three quarters. In 1Q14, the combined revenues of these companies grew 6.4% over 1Q13. In comparison to these companies, the cable assembly market for the worldwide transportation market sector grew 5.3% year over year in 2012 and grew 2.8% in 2013.

Bishop follows electronic interconnect sales trends in 13 markets. The combined annual revenue of all the market sectors was $4.24 trillion in 2013 and grew 0.8% over 2012. Of the 13 market sectors, transportation was the third fastest growing market sector in 2013 at 3.2%, with combined revenues of $343.1 billion. Profitability was $18.3 billion at 5.3% of sales.

Trinity Industries had the most growth of the transportation companies at 56.6% year over year in 1Q14 with sales of $1,461 million. Manufactured products, including rail cars and inland barges, grew 27.4% in 1Q14. Railcar leasing grew 330% over prior year.

Boeing had the second largest increase in sales in 1Q14 at 19.1% year over year to $12,737 million for its commercial aircraft business. Boeing delivered 161 planes in the first quarter, an increase of 17.5% over 1Q13.

Westinghouse Air Brake grew 13% year over year in 1Q14 to $695 million. The freight segment of the business grew 23% during the quarter, while the transportation segment grew by 2.7%.

Cummins Engine grew 12.3% year over year in 1Q14 to $4,406 million. Cummins states that the increase was “driven primarily by increased demand in North American on-highway markets.”

Wabash grew 10.5% year over year in 1Q14 to $358 million. The company manufactures semi-trailers and tankers. Increasing revenues are credited to the “trucking recovery and aging fleet equipment.”

Volvo and Agco are the only companies in this sector reporting declining sales in 1Q14. Volvo sales were down 10.5% from the year prior and Agco was down 2.9%.

The following table shows the results for the 13 companies we track in the transportation market sector.

Transportation Market Sector - Sales and Net Income

As shown in the following chart, year-over-year sales have been in the mid to high single-digit range over the last three quarters. Sequentially, first quarter 2014 sales declined 14.8% from the fourth quarter of 2013.

Transportation market percent change in sales by quarter YOY

Trends in the Transportation Market

  • Improvements in worldwide economies have been good for this market sector. The mature economies of the world require more transportation equipment to replace older, existing equipment and the emerging economies are looking to expand their capabilities and resources.
  • Demand and aging fleets will continue to drive demand for narrow body and regional jets.
  • Increasing levels of disposable income worldwide will bode well for the recreational vehicle market.

Bishop & Associates projects the worldwide market for transportation cable assemblies will grow 8.8% in 2014 to $8.6 billion. At 13.1% year-over-year growth, China will be the fastest-growing region in 2014 for this market sector.

Dave Pheteplace, VP, Bishop & Associates, Inc.

Dave Pheteplace
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