IAI reports record profits in fateful week
Israel Aerospace Industries (IAI) has reported a sharp rise in profit in the first nine months of this year. IAI posted a net profit of $112 million for the period, 37% higher than in the corresponding period of 2019. Net profit was 3.6% of sales, which compares with 2.7% in the corresponding period of 2019. The company said today that the net profit for the first nine months of 2020 was higher than the profit for the whole of 2019. Sales grew to $3.08 billion from $3.02 billion in the first nine months of 2019, Trend reports with reference to Globes.
A strong performance from the military division compensated for weakness in the civil aviation division, which posted a net loss and contributed to a slight fall in the company's orders backlog. Sources at IAI said that "the profitability of the military side of IAI is now as good as that of Elbit Systems."
IAI chairman Harel Locker said today, "The growth in sales and the improvement in profitability and in the rest of the financial results are the product of meticulous realization by the management and staff of the company's strategy in the past three years and of the fact that the goals set in its business plan have been met.
"The coronavirus pandemic has mainly affected the civil aviation division, but IAI is a company with varied technology and products active in about 100 countries. This product and geographical diversity enables us to cope with the challenges of the coronavirus, and positions the company well to cope in the future with the global crisis and to continue its business success and its activity in support of Israel's security and its economy."
Two important events are due to take place concerning IAI this week. The first is a decision on the company's new CEO, which is due tomorrow. Today, Gen. (res.) Hagai Topolansky withdrew his candidacy for the post, and the expectation is that the replacement for Nimrod Sheffer will come from within the company. The second event will be on Thursday, when the ministerial privatization committee will convene to decide whether to approve the plan for privatization of IAI. In relation to that, company sources said, "The capital market is hot, the company has presented excellent results, and we hope that the government will make the right decision." On Topolansky's candidacy, the sources said, "We withstood the political, professional and other pressures to appoint the friend from the Air Force."
For the third quarter, IAI posted a net profit of $30 million (3% of sales), which compares with $32 million (3.1% of sales) in the corresponding quarter of 2019. Third quarter sales were $1,006 million, down from $1,030 million in the corresponding quarter.
The company's orders backlog at the end of the third quarter was $12.7 billion, which compares with $13.4 billion at the end of 2019. The company stressed that 79% of the backlog consisted of orders from overseas, with a wide geographical spread. The backlog is made up of a wide variety of projects, and ensures 3.2 years of activity at the current rate of sales.