What drove RTX's gross profit growth in 2023?

Raytheon Technologies Corporation (RTX) experienced a significant increase in gross profit in 2023, driven by several key factors:

1. Revenue Growth: The most notable driver of RTX's gross profit growth was the rise in total revenue, which reached $68.92 billion for the year. This increase was fueled by strong performance across various segments, including Collins Aerospace and Pratt & Whitney, as well as growth in the commercial aftermarket and commercial OEM businesses.

RTX Gross Profit, Total Revenue

2. Segmental Performance: Collins Aerospace, in particular, saw a significant increase in adjusted sales, growing by 17% year-over-year to $6.68 billion. This improvement was due to higher volume and content, as well as a favorable mix across commercial aftermarket. Similarly, Pratt & Whitney's adjusted revenues were estimated at $6,012 million for the third quarter, indicating an 11.7% increase from the previous year's figure.
3. Military Sales: The military segment also contributed to the revenue growth, with solid order growth and a significant F135 production contract volume. The company's military business benefited from increased global defense budgets, which bolstered sales and contributed to the overall revenue and profit growth.
4. Operational Efficiency: Despite higher expenses at Collins Aerospace and Pratt & Whitney, RTX's overall operational performance improved, with total costs and expenses decreasing year-over-year. This efficiency in managing expenses allowed RTX to maintain profitability and support the growth in gross profit.

In summary, RTX's gross profit growth in 2023 was primarily driven by robust revenue growth across key segments, including Collins Aerospace and Pratt & Whitney, fueled by favorable market conditions and strategic business decisions.