Weak Cash ConversionNegative operating and free cash flow despite reported profits point to working capital strain, timing of receipts, or elevated investments. Over several months this can force reliance on external financing, increase funding costs, constrain supplier relationships, and reduce capacity to self-fund program deliveries or sustainability services.
Rising LeverageA large increase in debt materially raises financial fixed costs and covenant exposure. Higher leverage reduces flexibility to absorb procurement timing swings, limits ability to invest opportunistically, and increases refinancing and interest-rate sensitivity—structural risks for a company dependent on multi‑year defense contracts.
Earnings VolatilitySharp swings from loss to profit indicate execution, program mix, or one-off sensitivity. For defense suppliers this undermines predictability for long-term contracts and budgeting, raises scrutiny from customers and lenders, and makes sustaining repeatable margins and cash generation more uncertain across procurement cycles.