from the January 2008 issue

Earnings jump at Israel Aircraft Industries

In the latest of a series of robust earnings announcements from Israeli defense and security companies, Israel Aircraft Industries has reported a 56 percent increase in year-over-year quarterly earnings.

This amounted to $36 million in net profit for the third quarter of 2006, according to an IAI statement. For the same period in 2006, net profit was $23 million; in 2005, $11 million.

The company's vice president of corporate communications, Doron Suslik, told United Press International in a telephone interview that on the military side of the company's operations, "significant activity" in the field of unmanned aerial vehicles drove much of the sales growth. The company's Hunter UAV is in use by the U.S. military in Iraq.

"There were a few ... big contracts," Suslik said of the UAV sales for the quarter.

Dun & Bradstreet, in its annual report on Israel's 100 largest companies, said this about IAI's activity in the UAV market: "IAI is a world leader in totally integrated UAV solutions, with more than 330,000 operational hours of intelligence and targeting missions. The company offers systems from tactical close range to Medium Altitude Long-Endurance (MALE) UAVs systems."

"UAVs have a big advantage: they can be sent into war zones, into battle zones, without using manpower. (The vehicles) hover and immediately transmit pictures and intelligence on a situation, or on an enemy's position," Suslik said.

When asked to interpret the big jump in sales, Suslik said: "There is a big demand for technology projects, because this is a unique technology that offers a unique solution." He added that it is the company's policy to cooperate with local industries and governments to create tailor-made projects. This includes local employment, he said -- and in some cases, even cooperation on research and development.

Sixty percent of IAI's sales were to the military, according to the company. However, civilian sales are growing; Suslik told UPI the primary product behind that market growth is the "executive aircraft" market -- luxury private planes that sell exceptionally well in the United States.

A potential point of crossover between the company's success with UAVs and its desire to increase civilian sales could be the civilian UAV, an idea that was introduced at an Aeronautical Convention in Israel in February of this year.

"Based on (existing UAV) technologies, the company plans to develop a small unmanned plane that will be able to carry up to four passengers," Ynet, the Internet division of the Israeli daily Yedioth Aharonoth, reported at the time. "Zvi Arazi, head of the IAI's Engineering Division, stated (at) the convention that the technology for developing such a plane already exists, and that the main obstacle that would have to be overcome is the passengers' hesitation to board an unmanned craft," according to the report. "The backlog ... reached $7.3 billion, an all-time high. This figure was reached internally without any outside mergers or acquisition which makes the achievement even more significant," the company's new president and chief executive officer, Itzhak Nissan, said via the company statement. Of that figure, 83 percent is slated for export, the company emphasized.

"In this period the company continued its technological achievements, which include the successful testing of the Arrow Weapon System and the launch of the Ofek 7 Imaging Satellite, sales of over 60 G150 and G200 business jets and conversion of passenger aircraft to freighter configuration," Nissan continued.

Suslik was reluctant to make predictions for the future, as regulations governing the company's upcoming IPO on the Tel Aviv Stock Exchange strictly govern financial forecasts.

Reprinted from the Israel High-Tech & Investment Report January 2008

Click HERE to request further information.
Click HERE to go BACK.