Composite 3d

Demand for composite material is predicted to double by 2015, which is leading to major investments from aerospace manufacturers, as well as numerous mergers and acquisitions (M&A), according to a new report from Catalyst Corporate Finance and Ricardo Strategic Consulting.

The penetration of composite material is increasing due to the demand for high-strength lightweight material and improved fuel efficiency.

The use of composite has increased in the aerospace sector; recently, the new Airbus A350, an aircraft developed with a high proportion of composite material, completed its maiden flight.

In the aerospace sector, the market for composites will continue to surge and is estimated to be worth $4.1bn by 2016.

The demand will be driven by increasing passenger traffic, which will support major aircraft build programmes and demanding production rates, with continued development of interiors comprising a large number of GFRP components. In addition, a need for OEMs to increase fuel efficiency, carbon-fibre-reinforced polymer (CFRP) is becoming an increasing share of structural weight.

The demand will also fuelled by developments in combat aircraft such as Lockheed Martin’s Joint Strike Fighter, which is manufactured using around 30% CFRP, according to the report.

This increasing use of composites is affecting the market in other ways, with strategic buyers using acquisitions for growth to expand into higher end markets and gain access to new processes and technologies.

The composites manufacturers are investing heavily in order to meet this increasing demand; for instance, speciality chemicals and materials firm Cytec is spending $250m per annum to meet the demand from its aerospace customers.

In addition, the companies are implementing a vertical integration strategy to safeguard their position in the supply chain, another feature of recent M&A activity.

For example, UK-based OEM supplier Avingtrans acquired Composites Engineering in order to gain access to the aerospace composite market, as well as provide integrated metal and composite components to its global customer base.

"We expect to see not only trade buyers active in the market, but increasing interest from private equity who will see the sector as an opportunity to develop buy and build platforms or acquire businesses to build their portfolio in the sector."

The report stated that the drive towards increased use of composites across a range of sectors, mergers and acquisitions was expected to continue to reach record levels over the next few years.

Catalyst Corporate Finance partner Mark Humphries said that the driving force behind this trend would be raw materials manufacturers looking to secure component production capacity, alongside OEMs that will be leveraging partnerships to access key technologies.

"We expect to see not only trade buyers active in the market, but increasing interest from private equity who will see the sector as an opportunity to develop buy and build platforms or acquire businesses to build their portfolio in the sector," Humphries said.

The research report has been put together by Catalyst Corporate Finance and Ricardo Strategic Consulting, with contributions from National Composites Centre.

Catalyst is an international corporate finance advisor specialising in company sales, acquisitions, private equity and debt funded management buy-outs.

Ricardo Strategic Consulting is part of Ricardo, a consultancy for engineering, technology, project innovation and strategy. It offers services to transportation original equipment manufacturers, supply chain organisations, energy companies, financial institutions and governments.

Image: In the aerospace sector, the market for composites will continue to surge and is estimated to be worth $4.1bn by 2016. Photo: courtesy of PerOX.

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