Elbit profit up, lowers dividend temporarily

Defense-electronics firm Elbit Systems reported higher quarterly profit on Tuesday and said its business has not been substantially impacted by the coronavirus outbreak.

The maker of drones, pilot-helmet displays and cybersecurity systems said it earned $1.63 per diluted share excluding one-time items in the first quarter, up from $1.54 a year earlier. Revenue rose to $1.07 billion from $1.02b. Its shares were 3.1 % higher in early trading. Though business during the quarter was not materially impacted by the pandemic, “subsequently, some of our businesses have begun to experience certain disruptions due to government-directed safety measures, travel restrictions and supply-chain delays,” Elbit said. “To date, the financial impact to us of these disruptions has not been material.”

Still, Elbit has taken precautionary measures, including reducing its dividend in the quarter to 35 cents a share from 44 cents a year earlier. Chief executive Bezhalel Machlis said this was temporary.

“There is uncertainty... so we are taking all the relevant measures to be sure we are ready,” he told Reuters. “We collected a lot of cash from different sources, and inventory is a bit higher, to make sure we can continue to deliver to our customers.”

The company also cut costs, including temporarily reducing management salaries and furloughing about 300 of its 17,000 workers, although some have already returned.

In the past 18 months Elbit bought weapons maker IMI from Israel’s government for $500 million and the night-vision business of L3Harris Technologies for $350m. These acquisitions and growth in North America boosted first-quarter results.

Elbit’s order backlog climbed to a record $10.79b. at the end of the quarter from $9.66b. a year earlier.

Elbit will record a pretax gain of $40m. in the second quarter from the sale of part of its shares in cybersecurity firm Cyberbit and from a real-estate deal.

Meanwhile, Paz Oil reported an 88% drop in quarterly profit, saying the coronavirus outbreak exacerbated declines in refining margins, oil prices and sales volumes. Paz, Israel’s largest distributor of refined oil products, said on Tuesday it earned an adjusted net profit of NIS 8m. ($2.3m.) in the January-March period, compared with NIS 68m. a year earlier. Revenue slipped 10% to NIS 2.8b., while its refining margin dipped to $4 a barrel from $5.4 a barrel a year earlier and a peak of $7.6 a barrel in the third quarter. (Reuters)