Goodrich Corporation (GR)

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This article discusses the airplane part maker. For the Oil and Gas company that owns oil fields in Texas and Louisiana, see Goodrich Petroleum (GDP).

Goodrich Corporation (NYSE:GR) manufactures and sells components and systems for commercial and military aircraft. With jet fuel prices increasing, commercial airlines are demanding more fuel efficient aircraft like Boeing’s 787. Furthermore, developing countries are demanding more planes. GR's aftermarket sales for commercial and business airplanes are growing since aircraft numbers are rising and planes are always aging.^[1]

Business Overview

Business Segments

Goodrich Corporation is broken down into three business segments.

Actuation and Landing Systems (37.8% of total sales)

This segment manufactures and produces flight controls, helicopter's main and tail rotors, complete landing gear systems (including wheels and brakes), fuel controls, electrical systems, surveillance systems, and provide maintenance and repair services associated with aircraft engines and aircraft interior products. They also provide a significant amount of aftermarket support for the entire life cycle of airplanes and defense programs by providing products and services to their customers to replace, repair, or overhaul their products.

Nacelles and Interior Systems (34.7% of total sales)

The Nacelles and Interior Systems business provides maintenance, repair and overhaul services associated with aircraft engines, including thrust reversers, cowlings, nozzles and their components, and aircraft interior products, which include slides, seats, cargo and lighting systems.

Electronic Systems (27.5% of total sales)

The Electronic Systems segment produces a variety of systems that provide flight performance measurements, flight management, fuel controls, electrical systems, and control and safety data, as well as reconnaissance and surveillance systems.

Key Trends and Forces

Increasing Demand for Commercial Aircraft Increases GR’s sales.

About 70 percent of Goodrich Corporation’s sales come from commercial aircraft programs. GR sells products and service for Airbus' A380 and A350XWB, Boeing's 787, Embraer's 190, and Dassault's Falcon 7X. Commercial airlines are demanding more fuel efficient airplanes, such as Boeing’s 787, as jet fuel prices are rising.^[2]

Events that have a negative impact on the commercial aircraft market, such as the unexpected terrorist attack on 9/11 or a dramatic increase in fuel-prices that consumers cannot cope with, will also negatively affect GR by negatively affecting their customers.

Availability and Pricing of Raw Materials Affects GR's Profit Margin

Goodrich Corporation purchases aluminum, titanium, steel, carbon fiber, and other various specialty metals which are used to manufacture their products. The loss of a supplier or a delay from the supplier can have a negative impact on GR, since it would pressure their contractual obligations to deliver their products on time. Furthermore, supply fluctuations of these raw materials can lead to prices changes that affect GR's margins. Although titanium prices have decreased, both aluminum and steel prices have had an increasing trend. Steel Prices have been rising and continue to increase.^[3] As the price of the materials GR uses increase, GR's costs increase, squeezing margins and slowing income growth.

Goodrich and China

Goodrich Names Michael Barbalas as President of its China Activities

CHARLOTTE, N.C., April 7, 2010 /PRNewswire via COMTEX/ --Goodrich Corporation (NYSE: GR) has named Michael Barbalas as president of its China activities, reporting to Cindy Egnotovich, Segment President, Nacelles and Interior Systems. Barbalas joins Goodrich from the American Chamber of Commerce in China, headquartered in Beijing, where he served as president. He replaces Ken Wood, who will be retiring after 24 years of service at Goodrich.

Commenting on the changes, Egnotovich said, "China is the fastest growing aerospace market in the world, and Mike has spent more than 20 years building relationships with some of the top companies and government entities in the region. As Goodrich continues to grow its operations and customer base in China, we will look to his leadership and experience to bring us to the next level of operational excellence and customer satisfaction there."

Competition

GR operates in a highly competitive aerospace industry. The following tables list GR’s major competitors in each business segment, which is further broken down into major aerospace products and systems platforms. GR competes with both domestic and foreign companies.

GR's direct competitors include:

• BAE Systems (LON: BA)
• Honeywell International (HON)
• United Technologies (UTX)

Goodrich Names Michael Barbalas as President of its China Activities[1]

References

1. ↑ GR 2007 10-K, Pg 25
2. ↑ Jet Fuel Prices Soar...So Do Airline Tickets
3. ↑ Steel Prices
4. ↑ GR 2007 10-K, Pg 3
5. ↑ GR 2007 10-K, Pg 3-4
6. ↑ GR 2007 10-K, Pg 3-4