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Future of the Brazilian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023

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Future of the Brazilian Defense Industry-Market Attractiveness, Competitive Landscape and Forecasts to 2023

Summary

"Future of the Brazilian Defense Industry-Market Attractiveness, Competitive Landscape and Forecasts to 2023", published by GlobalData, provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

This report offers detailed analysis of the Brazilian defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.

In particular, it provides an in-depth analysis of the following-

- The Brazilian defense industry market size and drivers: detailed analysis of the Brazilian defense industry during 2019-2023, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country's expenditure and modernization patterns

- Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country

- Porter's Five Force analysis of the Brazilian defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry

- Import and Export Dynamics: analysis of prevalent trends in the country's imports and exports over the last five years

- Market opportunities: details of the top five defense investment opportunities over the next 10 years

- Competitive landscape and strategic insights: analysis of the competitive landscape of the Brazilian defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.

Scope

- Brazilian military expenditure, which stands at USD 25.8 billion in 2018, registered at a CAGR of -5.81% during the historic period. There is a huge difference between the planned budget and the executed budget in 2015 due to the economic crisis the country faced. However, the country's economy is showing some positive signs of recovery, as the 2017 budget marginally surpassed its initially planned estimates.

- Brazil relies on imports to retain its military edge and, although the country has a decent domestic defense industry, the country relies on imports of cutting-edge defense technologies from the US and European suppliers. During the historic period, the country's defense imports were the highest in 2012. Aircraft and armored vehicles dominated imports during this period, with Germany and the US being the main suppliers. In order to protect its oil rich reserves in the Amazon basin, Brazil is spending heavily on naval vessel procurements over the forecast period. Brazil has contracted the French defense company DCNS to supply four diesel-electric-powered submarines, based on the Scorpene model.

Reasons to buy

- This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Brazilian defense industry market trends for the coming five years

- The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period

- Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector

- A deep qualitative analysis of the Brazilian defense industry covering sections including demand drivers, Porter's Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts.

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Table Of Content

Scope

Table of Contents

1. Introduction 8

1.1. What is this Report About? 8

1.2. Definitions 8

1.3. Summary Methodology 10

1.4. About GlobalData 11

2. Executive Summary 12

3. Market Attractiveness and Emerging Opportunities 14

3.1. Current Market Scenario 15

3.1.1. Primary Threat Perception 15

3.1.2. Military Doctrine and Strategy 16

3.1.3. Military Fleet Size 22

3.1.4. Procurement Programs 29

3.1.5. Social, Political and Economic Environment and Support for Defense Projects 33

3.1.6. Political and Strategic Alliances 34

3.2. Defense Market Size Historical and Forecast 35

3.2.1. Brazilian defense budget is expected to grow at a CAGR of 1.77% over 2019-2023 35

3.2.2. Development of indigenous defense capabilities, modernization of defense systems, and large defense procurement projects are expected to boost Brazilian defense expenditure 37

3.2.3. Defense budget as a percentage of GDP will remain at an average of 1.21% over the forecast period 39

3.3. Analysis of Defense Budget Allocation 41

3.3.1. Percentage allocation towards capital expenditure to remain constant 41

3.3.2. Capital expenditure is anticipated to record a CAGR of 4.81% over the forecast period 42

3.3.3. The army accounted for the largest percentage share of the overall Brazilian defense budget 44

3.3.4. Army to continue accounting for the lion's share of Brazilian defense budget 46

3.3.5. Brazilian per capita defense expenditure to increase over the forecast period 50

3.4. Homeland Security Market Size and Forecast 52

3.4.1. Brazil's homeland security market is expected to grow at a CAGR of 3.42% over the forecast period 52

3.4.2. Human trafficking will drive homeland security expenditure 54

3.4.3. Brazil falls under the some risk category on the terrorism index 55

3.4.4. Brazil faces some threats from terrorist organizations 56

3.4.5. Brazil has a terrorism index score of 1.6 58

3.5. Benchmarking with Key Global Markets 59

3.5.1. Brazil ranks among major global defense markets 59

3.5.2. Brazil is expected to remain among top defense spending countries in the world 61

3.5.3. Brazil is expected to spend an average of 1.15% of its GDP on defense over the forecast period 62

3.6. Market Opportunities: Key Trends and Drivers 63

3.6.1. Top Defense Market Sectors by Value (USD Million)-Projections over 2018-2023 63

3.6.2. Multirole Aircraft 64

3.6.3. Diesel Electric Submarines 65

3.6.4. Land-based C4ISR 66

4. Defense Procurement Market Dynamics 67

4.1. Import Market Dynamics 69

4.1.1. Modernization of defense systems expected to drive arms imports 69

4.1.2. Germany, US, and France are the major suppliers for Brazil 70

4.1.3. Aircraft and armored vehicles accounted for 56.7% of Brazilian defense imports 71

4.2. Export Market Dynamics 72

4.2.1. Development of domestic defense capability is expected to fuel exports in Brazil's emerging military industry 72

4.2.2. Indonesia and Afghanistan are the major prospects for Brazilian defense exports 73

4.2.3. Aircraft accounted for the majority of Brazilian defense exports during 2013-2017 74

5. Industry Dynamics 75

5.1. Five Forces Analysis 75

5.1.1. Bargaining Power of Supplier: Low to Medium 76

5.1.2. Bargaining Power of Buyer: Medium to High 76

5.1.3. Barrier to Entry: Medium 76

5.1.4. Intensity of Rivalry: Low to Medium 76

5.1.5. Threat of Substitution: Medium to High 76

6. Market Entry Strategy 77

6.1. Market Regulation 77

6.1.1. International and domestic defense procurement deals are primarily decided by competitive bidding 77

6.1.2. Stringent offset requirements for all defense procurements 78

6.2. Market Entry Route 79

6.2.1. Budgeting Process 79

6.2.2. Procurement Policy and Process 80

6.2.3. Foreign OEMs follow direct offset route to enter defense market 81

6.2.4. Collaborations provide market entry opportunities 81

6.3. Key Challenges 82

6.3.1. Low allocation for defense capital expenditure and delay in the closure of defense deals are the major challenges of the Brazilian defense industry 82

6.3.2. Complying with Brazil's requirement for extensive technology transfer 82

7. Competitive Landscape and Strategic Insights 83

7.1. Competitive Landscape Overview 83

7.2. Key Public Sector Companies 85

7.2.1. Embraer: Overview 85

7.2.2. Embraer: Products 85

7.2.3. Embraer: Recent Announcements and Strategic Initiatives 85

7.2.4. Embraer: Alliances 86

7.2.5. Embraer: Recent Contract Wins 88

7.2.6. Embraer: Financial Analysis 89

7.2.7. Forjas Taurus SA: Overview 91

7.2.8. Forjas Taurus SA: Products 92

7.2.9. Forjas Taurus SA: Recent Announcements and Strategic Initiatives 93

7.2.10. Forjas Taurus SA: Alliances 94

7.2.11. Forjas Taurus SA: Recent Contract Wins 94

7.2.12. Forjas Taurus SA: Financial Analysis 95

7.2.13. Avibras Industria Aerospacial: Overview 97

7.2.14. Avibras Industria Aeroespacial: Products 97

7.2.15. Avibras Industria Aerospacial: Recent Announcements and Strategic Initiatives 98

7.2.16. Avibras Industria Aerospacial: Alliances 98

7.2.17. Avibras Industria Aerospacial: Recent Contract Wins 99

7.2.18. Companhia Brasileira de Cartuchos: Overview 100

7.2.19. Companhia Brasileira de Cartuchos: Products 100

7.2.20. Companhia Brasileira de Cartuchos: Recent Announcements and Strategic Initiatives 101

7.2.21. Companhia Brasileira de Cartuchos: Recent Contract Wins 102

7.2.22. Helibras: Overview 103

7.2.23. Helibras: Products 103

7.2.24. Helibras: Recent Announcements and Strategic Initiatives 103

7.2.25. Helibras: Alliances 104

7.2.26. Helibras: Recent Contract Wins 105

7.2.27. Industria de Material Belico do Brasil (IMBEL): Overview 106

7.2.28. Industria de Material Belico do Brasil (IMBEL): Products 106

7.2.29. Industria de Material Belico do Brasil (IMBEL): Recent Announcements and Strategic Initiatives 108

7.2.30. Industria de Material Belico do Brasil (IMBEL): Alliances 108

7.2.31. Industria de Material Belico do Brasil (IMBEL): Recent Contract Wins 109

7.2.32. Aeroelectronica: Overview 110

7.2.33. Aeroelectronica: Products 110

7.2.34. Aeroelectronica: Recent Announcements and Strategic Initiatives 111

7.2.35. Aeroelectronica: Alliances 111

7.2.36. Aeroelectronica: Recent Contract Wins 112

7.2.37. Industria Naval do Ceara: Overview 113

7.2.38. Industria Naval do Ceara: Products 113

7.2.39. Industria Naval do Ceara: Recent Announcements and Strategic Initiatives 113

7.2.40. Industria Naval do Ceara: Recent Contract Wins 114

7.2.41. Northrop Grumman Brazil: Overview 115

7.2.42. Northrop Grumman Brazil: Products 115

7.2.43. Northrop Grumman Brazil: Recent Announcements and Strategic Initiatives 115

7.2.44. Northrop Grumman Brazil: Alliances 116

7.2.45. Northrop Grumman Brazil: Recent Contract Wins 116

7.2.46. Lockheed Martin Brazil: Overview 117

7.2.47. Lockheed Martin Brazil: Products 117

7.2.48. Lockheed Martin Brazil: Recent Announcements and Strategic Initiatives 117

7.2.49. Lockheed Martin Brazil: Alliances 117

7.2.50. Lockheed Martin Brazil: Recent Contract Wins 118

8. Business Environment and Country Risk 119

8.1. Economic Performance 119

8.1.1. GDP Per Capita at Constant Prices 119

8.1.2. GDP at Current Prices 120

8.1.3. Exports of Goods and Services 121

8.1.4. Imports of Goods and Services 122

8.1.5. Gross National Disposable Income 123

8.1.6. BRL per USD (Period Average) 124

8.1.7. Market Capitalization of Listed Companies 125

8.1.8. Market Capitalization of Listed Companies as a Percentage of GDP 126

8.1.9. Government Cash Surplus/Deficit as a Percentage of GDP 127

8.1.10. Goods Exports and Imports as a Percentage of GDP 128

8.1.11. Services Exports and Imports as a Percentage of GDP 129

8.1.12. Foreign Direct Investment, net (BoP, current USD Billion) 130

8.1.13. Net Foreign Direct Investment as a Percentage of GDP 131

8.1.14. Mining, Manufacturing, Utilities Output (BRL Billion) 132

9. Appendix 133

9.1. About GlobalData 133

9.2. Disclaimer 133


List Of Figure

List of Figures

Figure 1: Brazilian Defense Expenditure (BRL Billion), 2014-2023 36

Figure 2: Brazilian Defense Expenditure (USD Billion), 2014-2023 36

Figure 3: Brazilian GDP Growth and Defense Expenditure as a Percentage of GDP Growth, 2014-2023 40

Figure 4: Brazilian Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 41

Figure 5: Brazilian Defense Capital Expenditure (BRL Billion), 2014-2023 43

Figure 6: Brazilian Defense Capital Expenditure (USD Billion), 2014-2023 43

Figure 7: Brazilian Defense Budget Share-(%) Split by Services (Army, Navy, Air Force and Other), 2014-2023 45

Figure 8: Brazil Defense Budget in BRL Billion-Breakdown by Services (Army, Navy, Air Force and Others) 2014-2023 47

Figure 9: Brazil Defense Budget in USD Billion-Breakdown by Services (Army, Navy, Air Force and Others) 2014-2023 49

Figure 10: Brazilian Per Capita Defense Expenditure (USD ), 2014-2023 51

Figure 11: Brazilian Homeland Security Expenditure (BRL Billion), 2014-2023 53

Figure 12: Brazilian Homeland Security Expenditure (USD Billion), 2014-2023 53

Figure 13: Terrorism Heat Map, 2018 55

Figure 14: Terrorism Index, 2018 58

Figure 15: Benchmarking with Key Markets, 2014-2018 vs 2019-2023 60

Figure 16: Defense Expenditure of the World's Largest Military Spenders (USD Billion), 2018 and 2023 61

Figure 17: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2018 62

Figure 18: Multirole Aircraft Market Size (USD Million), 2018-2023 64

Figure 19: Diesel Electric Submarine Market Size (USD Million), 2018 -2023 65

Figure 20: Military Land-based C4ISR Market Size (USD Million), 2018-2023 66

Figure 21: Top Brazilian Defense Procurements in Terms of Their Supplier Relationships 68

Figure 22: Brazilian Defense Import Trend (USD Million), 2013-2017 (TIV Values*) 69

Figure 23: Brazilian Defense Imports by Country (%), 2013-2017 70

Figure 24: Brazilian Defense Imports by Category (%), 2013-2017 71

Figure 25: Brazilian Defense Export Trend (USD Million), 2013-2017 (TIV Values) 72

Figure 26: Brazilian Defense Exports by Country (%), 2013-2017 73

Figure 27: Brazilian Defense Exports by Category (%), 2013-2017 74

Figure 28: Industry Dynamics-Porter's Five Forces Analysis 75

Figure 29: Embraer-Revenue Trend Analysis (BRL Billion), 2013-2017 89

Figure 30: Embraer-Operating Profit Trend Analysis (BRL Billion), 2013-2017 90

Figure 31: Embraer-Net Profit Trend Analysis (BRL Billion), 2013-2017 90

Figure 32: Forjas Taurus SA-Revenue Trend Analysis (BRL Million), 2013-2017 95

Figure 33: Forjas Taurus SA-Operating Profit Trend Analysis (BRL Million), 2013-2017 95

Figure 34: Forjas Taurus SA-Net Profit Trend Analysis (BRL Million), 2013-2017 96

Figure 35: Brazilian GDP Per Capita at Constant Prices (USD ), 2015-2025 119

Figure 36: Brazil GDP at Current Prices (USD Billion), 2015-2025 120

Figure 37: Brazilian Exports of Goods and Services (BRL Billion), 2005-2014 121

Figure 38: Brazilian Imports of Goods and Services (BRL Billion), 2005-2014 122

Figure 39: Brazilian Gross National Disposable Income (USD Billion), 2010?2014 123

Figure 40: Brazilian BRL per USD , 2015-2024 124

Figure 41: Brazilian Market Capitalization of Listed Companies (USD Billion), 2005-2012 125

Figure 42: Brazilian Market Capitalization of Listed Companies as a Percentage of GDP, 2005-2012 126

Figure 43: Brazilian Government Cash Surplus/Deficit as a Percentage of GDP (BRL), 2005-2009 127

Figure 44: Brazilian Goods Exports and Imports as a Percentage of GDP, 2005-2014 128

Figure 45: Brazilian Services Exports and Imports as a Percentage of GDP, 2005-2014 129

Figure 46: Brazilian Foreign Direct Investment, net (BoP, current USD Billion), 2005-2014 130

Figure 47: Brazilian Net Foreign Direct Investment as a Percentage of GDP, 2005-2014 131

Figure 48: Brazilian Mining, Manufacturing, Utilities Output (BRL Billion), 2005-2014 132


List Of Table

List of Tables

Table 1: Brazilian-Defense Modernization Priorities 17

Table 2: Brazilian Army-High Priority Projects 19

Table 3: Brazilian Army-High Priority Projects 20

Table 4: Brazilian Air Force-High Priority Projects 21

Table 5: Brazilian Army Strength 22

Table 6: Brazilian Air Force Strength 25

Table 7: Brazilian Navy Strength 27

Table 8: Brazilian-Ongoing Development and Procurement Programs 29

Table 9: Brazilian-Future Procurement Programs 31

Table 10: Brazil-Top Defense Procurement Programs by Value (USD Million), 2018-2023 32

Table 11: Brazilian Defense Expenditure (BRL Billion & USD Billion), 2014-2023 35

Table 12: Brazilian GDP Growth and Defense Expenditure as a Percentage of GDP Growth, 2014-2023 39

Table 13: Brazilian Defense Capital Expenditure (BRL Billion & USD Billion), 2014-2023 42

Table 14: Brazilian Defense Budget Share-(%) Split by Services (Army, Navy, Air Force and Other), 2014-2023 44

Table 15: Brazilian Defense Budget Allocations in BRL Billion-Breakdown by Services (Army, Navy, Air Force and Others) 2014-2023 46

Table 16: Brazilian Defense Budget in USD Billion-Breakdown by Services (Army, Navy, Air Force and Others) 2014-2023 48

Table 17: Brazilian Per Capita Defense Expenditure (USD ), 2014-2023 50

Table 18: Brazilian Homeland Security Expenditure (BRL Billion & USD Billion), 2014-2023 52

Table 19: Terrorism Index, 2018 56

Table 20: Benchmarking with Key Markets-2014-2018 vs 2019-2023 59

Table 21: Top Indian Defense Market Sectors by Value (USD Million)-2018-2023 63

Table 22: Brazil-Offset Guidelines and Agreements 78

Table 23: Brazil Budget Formation Timetable 79

Table 24: Competitive Landscape of the Brazilian Defense Industry 84

Table 25: Embraer-Alliances 86

Table 26: Embraer-Recent Contract Wins 88

Table 27: Forjas Taurus SA-Products 92

Table 28: Forjas Taurus SA-Alliances 94

Table 29: Forjas Taurus SA-Recent Contract Wins 94

Table 30:Avibras Industria Aerospacial-Alliances 98

Table 31: Avibras Industria Aerospacial-Recent Contract Wins 99

Table 32: Companhia Brasileira de Cartuchos-Recent Contract Wins 102

Table 33: Helibras-Alliances 104

Table 34: Helibras-Recent Contract Wins 105

Table 35: Industria de Material Belico do Brasil (IMBEL)-Alliances 108

Table 36: Industria de Material Belico do Brasil (IMBEL)-Recent Contract Wins 109

Table 37: Aeroelectronica-Alliances 111

Table 38: Aeroelectronica-Recent Contract Wins 112

Table 39: Industria Naval do Ceara-Recent Contract Wins 114

Table 40: Northrop Grumman Brazil-Alliances 116

Table 41: Northrop Grumman Brazil-Recent Contract Wins 116

Table 42: Lockheed Martin Brazil-Alliances 117

Table 43: Lockheed Martin Brazil-Recent Contract Wins 118

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Products and Companies

Products

Defense, budget, offset, regulation, capital expenditure, homeland, drivers, market opportunities, procurement, entry route, key challenge, announcements, alliances, contract awards, financial analysis, business environment


Companies

Empresa Brasileira de Aeronautica SA (Embraer)

Forjas Taurus SA

Avibras Industria Aerospacial (Avibras)

Companhia Brasileira de Cartuchosis

Helibras

Industria de Material Belico do Brasil (IMBEL)

Aeroelectronica

Industria Naval do Ceara (INACE)

Northrop Grumman Corporation (Northrop Grumman)

Lockheed Martin Corporation (Lockheed Martin)