El­bit Sys­tems Q3 profit up as de­fense bud­gets grow

Jerusalem Post - - BUSINESS & FINANCE - • By TOVA CO­HEN (Baz Rat­ner/Reuters)

De­fense elec­tron­ics firm El­bit Sys­tems re­ported higher third-quar­ter net profit on Tues­day and said its back­log of or­ders has ex­panded due to grow­ing de­fense bud­gets in its tar­get mar­kets.

The maker of drones, pi­lot hel­met dis­plays and cy­ber se­cu­rity sys­tems said it earned $1.57 per di­luted share ex­clud­ing one-time items in the three-month pe­riod, up from $1.46 a year ear­lier. Rev­enue rose to $800.7 mil­lion from $780.8 mil­lion.

El­bit’s order back­log climbed to $7.64 bil­lion at the end of Septem­ber from $6.84 bil­lion a year ear­lier. It said about 73% of the back­log were or­ders from abroad.

“The fact that our back­log grew by 12% and the fact that we see grow­ing de­mand for our prod­ucts and sys­tems is a very good in­di­ca­tion for con­tin­u­a­tion of growth in rev­enues and prof­its,” Chief Ex­ec­u­tive Bezhalel Mach­lis told Reuters.

“Com­bin­ing that with im­prov­ing ef­fi­cien­cies, I have no doubt that the com­pany will con­tinue to grow in all pa­ram­e­ters.”

He said a process be­gun a few years ago to re­duce du­pli­ca­tions, com­bine busi­ness units and cen­tral­ize pro­cure­ment ac­tiv­i­ties is bear­ing fruit by in­creas­ing profit mar­gins.

The back­log has been boosted by on­go­ing in­creases in de­fense bud­gets, “which we have been able to cap­i­tal­ize on in many of our tar­get mar­kets,” Mach­lis said.

Bud­gets have in­creased in the United States, El­bit’s big­gest mar­ket, as well as in Europe, where “there is de­mand to find so­lu­tions for ter­ror­ist threats.”

Ten­sions around North and South Korea as well as China have boosted de­fense de­mand in Asia, while coun­tries such as In­dia see de­fense spend­ing as a way to grow their econ­omy.

The mar­ket in Latin Amer­ica has stag­nated, mainly due to fall­ing oil and gas prices, though there is some re­cent im­prove­ment in this re­gion, Mach­lis said.

El­bit’s land sys­tems ac­tiv­i­ties in par­tic­u­lar posted strong growth in the quar­ter, with rev­enue jump­ing to $121 mil­lion from $31.8 mil­lion.

For many years the United States, with its “no boots on the ground” pol­icy, fo­cused on its air force and navy, but bud­gets are now grow­ing for ground op­er­a­tions. In ad­di­tion to ad­vanced ar­tillery de­fences and tank up­grades, El­bit pro­vides bor­der sur­veil­lance sys­tems for home­land se­cu­rity.

El­bit de­clared a div­i­dend of 44 cents for the third quar­ter, un­changed from the sec­ond quar­ter.

A MAN demon­strates El­bit Sys­tem’s ad­vanced hel­met mounted sys­tem, at its of­fices in Haifa ear­lier this year.

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