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April 6, 2020updated 07 Apr 2020 9:52am

COVID-19 outbreak will have a high-to-moderate impact on defence companies’ revenues: Poll

The COVID-19 coronavirus outbreak, which has intensified in the rest of the world outside China since March 2020, has forced many countries to announce either full or partial lock-downs.

The COVID-19 coronavirus outbreak, which has intensified in the rest of the world outside China since March 2020, has forced many countries to announce either full or partial lock-downs.

The developments during the outbreak continue to affect the operations of companies in multiple industries, especially those categorised as non-essential for the public, including the defence industry.

Verdict has conducted a poll recently to understand what industry observers and participants think about the impact of COVID-19 outbreak on the revenues of defence companies.

Nearly 80% of the respondents foresee at least a moderate impact on the revenues of defence companies, due to the novel coronavirus (nCoV) outbreak.

COVID-19 impact on defence company revenues: poll results

A majority 48% of the respondents opined that defence companies will feel a ‘high’ impact of COVID-19 on their revenues, while 31% opined the impact will be ‘moderate’.

A low impact of COVID-19 on revenues is foreseen by 21% of the respondents.

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The analysis was based on 686 responses received between March and April 2020.

COVID-19 impact on defence: What leading analytics firms such as PwC and GlobalData say

Budgeted spending by governments will safeguard the defence industry, says professional services provider, PwC, which adds that the financial impact due to COVID-19 on defence companies will be lesser compared to aerospace companies.

Defence companies in the US and the UK, such as Honeywell and QinetiQ, are announcing fiscal measures to contain the COVID-19 impact, such as entering delayed draw term loan agreements and postponing dividend announcements to preserve capital, according to GlobalData, a leading data and analytics company.

GlobalData, which predicts a lower GDP in the US and UK economies in 2020, anticipates a potential decrease in defence spending in the short to medium term due to reduced tax revenues.

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