Future of the Brazilian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018

NEW YORK, May 16, 2013 /PRNewswire/ -- Reportlinker.com announces that a new market research report is available in its catalogue:

Future of the Brazilian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018

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Product Synopsis

This report is the result of SDI's extensive market and company research covering the Brazilian defense industry, and provides detailed analysis of both historic and forecast defense industry values including key growth stimulators, analysis of the leading companies in the industry, and key news.

Introduction and LandscapeWhy was the report written?

The Future of the Brazilian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 offers the reader an insight into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain a market share in the Brazilian defense industry.

What is the current market landscape and what is changing?

Brazilian defense expenditure increased at a CAGR of 8.29% during the review period and valued US$35.85 billion in 2013. The focus of the Brazilian government will be on the modernization of its armed forces, participation in peacekeeping operations, and military procurements.

What are the key drivers behind recent market changes?

The modernization of the armed forces, development of indigenous defense capabilities, and large defense procurement projects are the major drivers of the Brazilian defense industry.

What makes this report unique and essential to read?

The Future of the Brazilian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 provides detailed analysis of the current industry size and growth expectations from 2014 to 2018, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.

Key Features and Benefits

The report provides detailed analysis of the current industry size and growth expectations from 2014 to 2018, including highlights of key growth stimulators, and also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.

The report includes trend analysis of imports and exports, together with their implications and impact on the Brazilian defense industry.

The report covers five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.

The report allows readers to identify possible ways to enter the market, together with detailed descriptions of how existing companies have entered the market, including key contracts, alliances, and strategic initiatives.

The report helps the reader to understand the competitive landscape of the defense industry in Brazil. It provides an overview of key defense companies, both domestic and foreign, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.

Key Market Issues

Brazil has a strict offset obligation for defense deals, equivalent to 100% of the contract value. This has proved a challenge for those foreign OEMs whose government has a policy of limited technology transfer, including the US-based company Boeing. Moreover, Brazil's offset policy requires that defense contracts use domestic companies for the manufacture and assembly of defense systems. A number of foreign OEMs have agreed to such offset requirements due to the availability of inexpensive labor and raw materials in the country. However, a significant portion of these companies are reluctant to share proprietary information with Brazil, and often fail to supply defense systems to the country as a consequence. These rigorous requirements by Brazil often delay the approval of defense deals.]

A significant challenge faced by defense suppliers to Brazil is the time taken by the Ministry of Defense to ratify defense deals. As defense procurements occur through competitive bidding, competing companies must undergo technical compliance checks, after which the ministry enters a lengthy negotiation process with bidders, designed to secure the maximum technology transfer at the lowest price. As such, the ratification process is further delayed by long negotiation periods and competing offers given by the various defense firms. Examples include the delay in selecting a supplier for the fourth-generation fighter jets and the delayed purchase of armored personnel carriers from the Italian branch of Invesco Ltd.Despite having the eleventh-largest defense expenditure globally, Brazil only allocates around 6-7% of its total defense expenditure to arms procurement. The country currently allocates 41% of its defense budget towards providing pensions for retired military personnel, and a significant amount is spent on the administration of its defense forces. Although domestic advancements by Brazilian defense firms are fueling the component procurement market, the deal value for these components is often small. This results in the Brazilian defense industry appearing as a relatively less attractive investment opportunity for foreign OEMs.

Key Highlights

All defense procurement and acquisitions made by the Ministry of Defense and associated bodies follow a competitive bidding process. The Ministry of Defense decides which company from which to procure equipment, depending on whether the equipment complies with the ministry's requirements, which company offers the lowest price, and which company offers the most technology transfer. The rule applies for both domestic and foreign suppliers without any preferential treatment for domestic suppliers.

Brazilian aircraft imports account for almost 46% of its total arms procurements, and involves the import of advanced fighter jets and components for the manufacture of indigenous aircraft systems such as helicopters and cargo aircraft. As the country's currency is strengthening and import duties are waved off, importing aircraft seems to be lucrative for the country. The country's naval procurements include submarines from Brazil and France. France has emerged as Brazil's leading arms supplier, with 17.5% share in country's total defense imports. On a number of occasions France has offered technology transfer to Brazil, which has helped it secure defense contracts with the country. Brazil supplies engines to Brazilian aircraft and submarine manufacturers, and is the second-largest arms supplier to the country. The implementation of the Amazon Protection System (SIVAM) has lead the country to procure radar and satellite components, most of which are supplied by the US defense firm Raytheon. During the review period, Brazil has also procured missile systems from Israel, the US, and Spain, which included anti-ship, anti-submarine, and beyond visual range missiles.

During 2008-2012, aircraft were the major exported product, with total 81% of the defense exports. This largest percentage of aircraft can be attributed to multiple deals of Embraer with foreign countries like Chile, Ecuador and Colombia etc.

Table of Contents

1.1. What is this Report About?

1.2. Definitions

1.3. Summary Methodology

1.4. SDI Terrorism Index

1.5. About Strategic Defence Intelligence (www.strategicdefenceintelligence.com)

2 Executive Summary

3 Market Attractiveness and Emerging Opportunities

3.1. Defense Market Size Historical and Forecast

3.1.1. Brazilian annual defense expenditure valued US$35.85 billion in 2013

3.1.2. Modernization of defense systems, development of indigenous defense capabilities, and large defense procurement projects expected to drive the Brazilian defense expenditure

3.1.3. Defense expenditure as a percentage of GDP is expected to average 1.92% during the forecast period

3.2. Analysis of Defense Budget Allocation

3.2.1. The majority of Brazil's defense budget is allocated for revenue expenditure

3.2.2. Overall capital expenditure is expected to grow at a CAGR of 8.54% during the forecast period

3.2.3. Army accounted for the largest percentage share during the review period

3.3. Homeland Security Market Size and Forecast

3.3.1. Brazil is expected to invest US$35.22 billion on homeland security during the forecast period

3.3.2. Protection of natural resources and improvement of security for Brazilian sporting events expected to stimulate homeland security expenditure

3.3.3. SDI Terrorism Index rates Brazil to be a "low risk" region

3.3.4. Brazil faces minimal threat from terrorists

3.4. Benchmarking with Key Global Markets

3.4.1. Brazil defense expenditure is expected to grow faster than the majority of the largest global defense budgets

3.4.2. Brazil set to continue its high defense expenditure

3.4.3. Brazil expected to spend an average of 1.9% of its GDP on defense over the forecast period

3.4.4. Brazil faces "low risk" by acts of terrorism

3.5. Market Opportunities: Key Trends and Drivers

3.5.1. Soldier Modernization- Lethality

3.5.2. Border security

3.5.3. Fighters and Multi-role aircraft

3.5.4. Homeland Security Infrastructure

3.5.5. Transport and Utility Aircraft

3.5.6. Armored Personal Carrier MRO

3.5.7. Software Infrastructure

4 Defense Procurement Market Dynamics

4.1. Import Market Dynamics

4.1.1. Aircraft and its component contributes a significant chunk out of the total defense procurement over the review period

4.1.2. Modernization of defense systems expect to drive arms imports

4.1.3. Stringent offset obligations in a highly competitive market

4.1.4. Aircraft, armored vehicles, missiles and ships were the key defense imports during 2008-2012

4.2. Export Market Dynamics

4.2.1. Development of domestic defense capability is expected to fuel exports in Brazil's emerging military industry

4.2.2. Customized aircraft systems expected to drive exports during the forecast period

4.2.3. Aircraft was the main exported defense product during 2008-2012

5 Industry Dynamics

5.1. Five Forces Analysis

5.1.1. Bargaining power of supplier: low to medium

5.1.2. Bargaining power of buyer: medium to high

5.1.3. Barrier to entry: medium

5.1.4. Intensity of rivalry: low to medium

5.1.5. Threat of substitution: high

6 Market Entry Strategy

6.1. Market Regulation

6.1.1. International and domestic defense procurement deals are primarily decided by competitive bidding

6.1.2. Stringent offsets requirements for all defense procurements

6.2. Market Entry Route

6.2.1. Foreign OEMs follow direct offset route to enter defense market

6.3. Key Challenges

6.3.1. Complying with Brazil's requirement for extensive technology transfer

6.3.2. Delay in the closure of defense deals and low allocation for capital defense expenditure

7 Competitive Landscape and Strategic Insights

7.1. Competitive Landscape Overview

7.2. Key Domestic Companies

7.2.1. Embraer: overview

7.2.2. Embraer: products and services

7.2.3. Embraer: recent announcement and strategic initiatives

7.2.4. Embraer - alliances

7.2.5. Embraer: recent contract wins

7.2.6. Embraer - financial analysis

7.2.7. Forjas Taurus SA: overview

7.2.8. Forjas Taurus SA: products and services

7.2.9. Forjas Taurus SA: recent announcement and strategic initiatives

7.2.10. Forjas Taurus SA: alliances

7.2.11. Forjas Taurus SA: recent contract wins

7.2.12. Forjas Taurus SA: financial analysis

7.2.13. Avibras Industria Aerospacial: overview

7.2.14. Avibras Industria Aerospacial: products and services

7.2.15. Avibras Industria Aerospacial: recent announcement and strategic initiatives

7.2.16. Avibras Industria Aerospacial: alliances

7.2.17. Avibras Industria Aerospacial: recent contract wins

7.2.18. Companhia Brasileira de Cartuchos: overview

7.2.19. Companhia Brasileira de Cartuchos: products and services

7.2.20. Companhia Brasileira de Cartuchos: recent announcement and strategic initiatives

7.2.21. Companhia Brasileira de Cartuchos: recent contract wins

7.2.22. Helibras: overview

7.2.23. Helibras: products and services

7.2.24. Helibras: recent announcement and strategic initiatives

7.2.25. Helibras: alliances

7.2.26. Helibras: recent contract wins

7.2.27. Helibras: financial analysis

7.2.28. Industria de Material Belico do Brasil (IMBEL): overview

7.2.29. Industria de Material Belico do Brasil (IMBEL): products and services

7.2.30. Industria de Material Belico do Brasil (IMBEL): recent announcement and strategic initiatives

7.2.31. Industria de Material Belico do Brasil (IMBEL): alliances

7.2.32. Industria de Material Belico do Brasil (IMBEL): recent contract wins

7.2.33. Industria de Material Belico do Brasil (IMBEL): financial analysis

7.2.34. Aeroelectronica: overview

7.2.35. Aeroelectronica: products and services

7.2.36. Aeroelectronica: recent announcement and strategic initiatives

7.2.37. Aeroelectronica: alliances

7.2.38. Aeroelectronica: recent contract wins

7.2.39. Indústria Naval do Ceará: overview

7.2.40. Indústria Naval do Ceará: products and services

7.2.41. Indústria Naval do Ceará: recent announcement and strategic initiatives

7.2.42. Indústria Naval do Ceará: recent contract wins

7.2.43. Northrop Grumman Brazil: overview

7.2.44. Northrop Grumman Brazil: products and services

7.2.45. Northrop Grumman Brazil: recent announcement and strategic initiatives

7.2.46. Northrop Grumman Brazil: alliances

7.2.47. Northrop Grumman Brazil: recent contract wins

7.2.48. EADS Brazil: overview

7.2.49. EADS Brazil: products and services

7.2.50. EADS Brazil: recent announcement and strategic initiatives

7.2.51. EADS Brazil: alliances

7.2.52. EADS Brazil: recent contract wins

7.2.53. Lockheed Martin Brazil: overview

7.2.54. Lockheed Martin Brazil: products and services

7.2.55. Lockheed Martin Brazil: recent announcement and strategic initiatives

7.2.56. Lockheed Martin Brazil: alliances

7.2.57. Lockheed Martin Brazil: recent contract wins

8 Business Environment and Country Risk

8.1. Demographics and Social Statistics

8.1.1. Population - Rural

8.1.2. Population - Urban

8.1.3. Population - Number of Households

8.2. Economic Performance

8.2.1. Gross Domestic per Capita

8.2.2. Gross Domestic Product, current US$

8.2.3. Exports of Goods and Services

8.2.4. Imports of Goods and Services

8.2.5. Gross National Disposable Income

8.2.6. Manufacturing Output

8.2.7. Consumer Price Index

8.2.8. Wholesale Price Index

8.2.9. Local Currency Unit per USD

8.2.10. Market Capitalization of Listed Companies

8.2.11. Market Capitalization of Listed Companies (% of GDP)

8.2.12. Total Government Cash Surplus/Deficit (LCU bn)

8.2.13. Goods Exports as a % of GDP

8.2.14. Goods Imports as a % of GDP

8.2.15. Goods balance as a % of GDP

8.2.16. Services Imports as a % of GDP

8.2.17. Services Exports as a % of GDP

8.2.18. Services balance (% of GDP)

8.2.19. Net Foreign Direct Investment (BoP, current US$ bn)

8.2.20. Net FDI as a % of GDP

8.2.21. International reserves, including Gold (US$ bn)

8.3. Energy and Utilities

8.3.1. Total Conventional Thermal Electricity Net Generation (Bn KWH)

8.3.2. Hydroelectricity Net Generation (Billion KWh)

8.3.3. Nuclear Electricity Net Generation (Billion kWh)

8.3.4. Total Conventional Thermal Electricity Installed Capacity (Million kW)

8.3.5. Proved reserves of Natural Gas (Trillion Cubic Feet)

8.3.6. Total Petroleum Consumption (Thousand Barrels Per Day)

8.4. Infrastructure Quality and Availability

8.4.1. Rail lines (total route km)

8.4.2. Air transport, freight (Million ton-km)

8.4.3. Overall Construction (US$ million)

8.5. Minerals

8.5.1. Mining, Manufacturing, Utilities Output (US$ billion)

8.6. Technology

8.6.1. Research and development expenditure (thousands LCU)

8.6.2. Patents Granted

8.7. Telecommunication

8.7.1. Telephone lines (in mn)

8.7.2. Telephone lines Penetration Rate (per 100 people)

9 Appendix

9.1. About SDI

9.2. Disclaimer

List of Tables

Table 2: Brazilian Defense Expenditure (US$ Billion),2014-2018

Table 3: Brazilian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2009-2013

Table 4: Brazilian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2014-2018

Table 5: Brazilian Defense Budget Split Between Capital and Revenue Expenditure (%), 2008-2012

Table 6: Brazilian Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2017

Table 7: Brazilian Capital Expenditure (US$ billion), 2009-2013

Table 8: Brazilian Capital Expenditure (US$ billion), 2013-2017

Table 9: Benchmarking with Key Markets - 2008-2012 vs. 2013-2017

Table10: SDI Terrorism Index

Table 11: Brazil - Offset Guidelines and Agreements

Table12:Embraer- Product focus

Table13:Embraer- Alliances

Table14:Embraer- Recent Contract Wins

Table15:Forjas Taurus SA- Product focus

Table16: Forjas Taurus SA- Alliances

Table17:Embraer- Recent Contract Wins

Table18:Avibras Industria Aerospacial- Product focus

Table19:Avibras Industria Aerospacial- Alliances

Table20:Avibras Industria Aerospacial- Recent Contract Wins

Table21:Companhia Brasileira de Cartuchos- Product focus

Table22: Companhia Brasileira de Cartuchos (CBC)- Recent Contract Wins

Table23:Helibras- Product focus

Table24:Helibras- Alliances

Table25:Helibras- Recent Contract Wins

Table26:Industria de Material Belico do Brasil (IMBEL)- Product focus

Table27:Industria de Material Belico do Brasil (IMBEL)- Alliances

Table28:Industria de Material Belico do Brasil (IMBEL)- Recent Contract Wins

Table29:Aeroelectronica- Product focus

Table30:Aeroelectronica- Alliances

Table31:Aeroelectronica- Recent Contract Wins

Table32:Indústria Naval do Ceará- Product focus

Table33: Indústria Naval do Ceará- Recent Contract Wins

Table34: Northrop Grumman- Product focus

Table35:Northrop Grumman- Alliances

Table36:Northrop Grumman - Recent Contract Wins

Table37:EADS Brazil- Product focus

Table38: EADS Brazil- Alliances

Table39: EADS Brazil- Recent Contract Wins

Table40: Lockheed Martin- Product focus

Table41: Lockheed Martin- Alliances

Table42:Lockheed Martin- Recent Contract Wins

List of Figures

Figure 2: Brazilian Defense Expenditure (US$ Billion), 2014-2018

Figure 3: Brazilian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2009-2013

Figure 4: Brazilian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2013-2017

Figure 5:Brazilian Defense Budget Split Between Capital and Revenue Expenditure (%), 2009-2013

Figure 6: Brazilian Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2017

Figure 7: Brazilian Capital Expenditure (US$ billion), 2009-2013

Figure 8: Brazilian Capital Expenditure (US$ billion), 2014-2018

Figure 9: Brazilian Defense Expenditure Allocation (US$ billion), 2009-2013

Figure 10: SDI Terrorism Heat Map, 2011

Figure 11: SDI Terrorism Index, 2011

Figure 12: Benchmarking with Key Markets - 2008-2012 vs. 2013-2017

Figure 13: Defense Expenditure of the World's Largest Military Spenders (US$ Billion), 2012 and 2017

Figure 14: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2012

Figure 15: Lethality (US$ Million), 2013-2023

Figure 16: Border Security (US$ Million), 2013-2023

Figure 17: Fighters and Multi-Role Aircrafts (US$ Million), 2013-2023

Figure 18: Homeland Security Infrastructure (US$ Million), 2013-2023

Figure 19: Transport and Utility Aircraft (US$ Million), 2013-2023

Figure 20: Armored Personal Carrier MRO (US$ Million), 2013-2023

Figure 21: Software Infrastructure (US$ Million), 2013-2023

Figure 22: Brazilian Defense Import Trend, 2008-2012 (TIV values)

Figure 23: Brazilian Defense Imports by Country (%), 2008-2012

Figure 24: Brazilian Defense Imports by Category (%), 2008-2012

Figure 25: Brazilian Defense Exports By Value (%), 2008-2012

Figure 26: Brazilian Defense Exports by Country (%),2008-2012

Figure 27: Brazilian Defense Exports by Category (%),2008-2012

Figure 28: Industry Dynamics - Porter's Five Forces Analysis

Figure 29: Embraer - Revenue Trend Analysis (R$ Million), 2008-2012

Figure 30: Embraer - Operating Profit Trend Analysis (R$ Million), 2008-2012

Figure 31: Embraer - Net Profit Trend Analysis (R$ Million), 2008-2012

Figure 32: Forjas Taurus SA - Revenue Trend Analysis (R$ Million), 2008-2012

Figure 33: Forjas Taurus SA - Operating Profit Trend Analysis (R$ Million), 2008-2012

Figure 34: Forjas Taurus SA - Net Profit Trend Analysis (R$ Million), 2008-2012

Figure 35: Industria de Material Belico do Brasil (IMBEL) - Revenue Trend Analysis (R$ Million), 2007-2011

Figure 36: Industria de Material Belico do Brasil (IMBEL) - Operating Profit Trend Analysis (R$ Million), 2007-2011

Figure 37: Industria de Material Belico do Brasil (IMBEL) - Net Profit Trend Analysis (R$ Million), 2007-2011

Figure 38: Brazil Population - Rural (In Millions), 2009-2018

Figure 39: Brazil Population - Urban (In Millions), 2009-2018

Figure 40: Brazil Population - Number of Households (In Millions), 2009-2018

Figure 41: Brazil GDP per capita, 2008-2017

Figure 42: Brazil Gross Domestic Product (current US$ Bn), 2009-2018

Figure 43: Brazil Exports of goods and services (current US$ Bn), 2002-2011

Figure 44: Brazil Imports of goods and services (current US$ Bn), 2002-2011

Figure 45: Brazil Gross national disposable income (US$ Bn), 2002 - 2011

Figure 46: Brazil Manufacturing Output (US$ Bn), 2002-2011

Figure 47: Brazil Consumer Price Index, 2009-2018

Figure 48: Brazil Wholesale Price Index, 2002-2011

Figure 49: Brazil LCU per US$, 2009-2018

Figure 50: Brazil Market Capitalization of listed Companies (US$ Bn), 2002-2011

Figure 51: Brazil Market Capitalization of listed companies as a % of GDP, 2004-2013

Figure 52: Brazil Government cash surplus/deficit (LCU Bn), 2001-2010

Figure 53: Brazil Goods Exports as a % of GDP, 2004-2013

Figure 54: Brazil Goods Imports as a % of GDP, 2004-2013

Figure 55: Brazil Goods balance as a % of GDP, 2004-2013

Figure 56: Brazil Services Imports as a % of GDP, 2004-2013

Figure 57: Brazil Services Exports as a % of GDP, 2004-2013

Figure 58: Brazil Services balance as a % of GDP, 2004-2013

Figure 59: Brazil Net Foreign Direct Investment (current US$ bn), 2004-2013

Figure 60: Brazil Net FDI as a % of GDP, 2004-2013

Figure 61: Brazil International reserves, including Gold (US$ Bn), 2004-2013

Figure 62: Brazil Total Conventional Thermal Electricity Net Generation (Bn KWH), 2003-2012

Figure 63: Brazil Hydroelectricity Net Generation (Bn KWH), 2003-2012

Figure 64: Brazil Nuclear Electricity Net Generation (Bn KWH), 2003-2012

Figure 65: Brazil Total Conventional Thermal Electricity Installed Capacity (Million Kilowatts), 2003-2012

Figure 66: Brazil Proved reserves of Natural Gas (Trillion Cubic feet), 2004-2013

Figure 67: Brazil Total Petroleum Consumption (Thousand Barrels per Day), 2004-2013

Figure 68: Brazil Rail lines (Total route Km), 2007-2012

Figure 69: Brazil Air transport, freight (Million ton-Km), 2003-2012

Figure 70: Brazil Overall Construction (US$ Bn), 2009-2018

Figure 71: Brazil Mining, Manufacturing, Utilities Output (US$ Bn), 2004-2013

Figure 72: Brazil Research and Development (thousands LCU), 2002-2010

Figure 73: Brazil Patents Granted, 2004-2013

Figure 74: Brazil Telephone lines (in mn), 2003-2012

Figure 75: Brazil Telephone lines Penetration Rate (per 100 people), 2004-2013

Companies Mentioned

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