Mentions of digitalization within the filings of companies in the aerospace and defence sector fell 67% between the second and third quarters of 2021.
In total, the frequency of sentences related to digitalization between October 2020 and September 2021 was 231% higher than in 2016 when GlobalData, from whom our data for this article is taken, first began to track the key issues referred to in company filings.
When companies in the aerospace and defence sector publish annual and quarterly reports, ESG reports and other filings, GlobalData analyses the text and identifies individual sentences that relate to disruptive forces facing companies in the coming years. Digitalization is one of these topics - companies that excel and invest in these areas are thought to be better prepared for the future business landscape and better equipped to survive unforeseen challenges.
To assess whether digitalization is featuring more in the summaries and strategies of companies in the aerospace and defence sector, two measures were calculated. Firstly, we looked at the percentage of companies which have mentioned digitalization at least once in filings during the past twelve months - this was 84% compared to 54% in 2016. Secondly, we calculated the percentage of total analysed sentences that referred to digitalization.
Of the 20 biggest employers in the aerospace and defence sector, Kongsberg Gruppen ASA was the company which referred to digitalization the most between October 2020 and September 2021. GlobalData identified 142 digitalization-related sentences in the Norway-based company's filings - 3% of all sentences. Thales SA mentioned digitalization the second most - the issue was referred to in 2.5% of sentences in the company's filings. Other top employers with high digitalization mentions included Leonardo SpA, BAE Systems Plc and Howmet Aerospace Inc.
Across all companies in the aerospace and defence sector the filing published in the third quarter of 2021 which exhibited the greatest focus on digitalization came from Mercury Systems Inc. Of the document's 1,307 sentences, eight (0.6%) referred to digitalization.
This analysis provides an approximate indication of which companies are focusing on digitalization and how important the issue is considered within the aerospace and defence sector, but it also has limitations and should be interpreted carefully. For example, a company mentioning digitalization more regularly is not necessarily proof that they are utilising new techniques or prioritising the issue, nor does it indicate whether the company's ventures into digitalization have been successes or failures.
In the last quarter, companies in the aerospace and defence sector based in Western Europe were most likely to mention digitalization with 0.96% of sentences in company filings referring to the issue. In contrast, companies with their headquarters in the United States mentioned digitalization in just 0.12% of sentences.