IAI reports flat sales in 2017

Joseph Weiss Photo: Kfir Ziv

Israel Aerospace Industries' orders backlog, however, swelled by $2.2 billion last year.

Israel Aerospace Industries (IAI) has released its results for 2017. Sales totaled $3,520 million last year, which compares with $3,577 million in 2016, representing a decrease of about 1.6%. IAI says that the decrease in sales is a result of a fall in the sales of the Military Aircraft Segment, the Civilian Aircraft Segment and the Systems Missiles & Space Segment, partly offset by the increase in sales of the Bedek Aviation Segment in view of the increased activity in aircraft conversion to cargo configuration.

IAI's orders backlog at the end of 2017 amounted to $11.2 billion, which compares with $9 billion at the end of 2016, an increase of $2.2 billion. 77% of the backlog represents sales to foreign customers. The orders backlog consists of a wide variety of products, and secures 3.2 years of operation.

Export sales accounted for 76% of sales in 2017, compared with 77% in 2016. Sales to the military market accounted for 70% of sales in 2017 compared with 73% in 2016.

Gross profit was $538 million in 2017 (15.3% of sales) compared with $477 million (13.3% of sales) in 2016. IAI says that the increase of $61 million in gross profit mainly stems from the increase in the profits of the Bedek Aviation division, and improvement in the profits of the Military Aircraft division and the ELTA Systems division, mainly thanks to adjustment of estimated project finishing costs.

Research and development expenses totaled $182 million in 2017, compared with $165 million in 2016 (5.2% and 4.6% of sales, respectively). The increase is mostly a result of the increase in corporate-wide R&D investments.

In 2017, IAI recorded income from the update of the provision for early retirement of employees totaling $9 million, compared with expenses totaling approximately $175 million in 2016. By the end of 2017, 753 employees retired in the context of the growth agreement.

Excluding early retirement expenses, adjusted operating income in 2017 amounted to $112 million (3.2% of sales) compared with adjusted operating income of $70 million (2% of sales) in 2016, an increase of $42 million, mainly deriving from the company's improved gross profit. On the same basis, adjusted EBITDA was to $248 million in 2017 (7% of sales), compared with adjusted EBITDA of $225 million (6.3% of sales) in 2016, an increase of $23 million.

Adjusted net profit (excluding retirement expenses), was $74 million in 2017, compared with $22 million in 2016, an increase of $52 million.

Cash flow from operating activities in 2017 amounted to $301 million, compared with $156 million in 2016.

In the fourth quarter of 2017, sales were $984 million, compared with $948 million in the corresponding quarter of 2016, an increase of 4%. Net profit for the quarter was $4 million (0.4% of sales), which compares with a net loss of $33 million in the corresponding quarter of 2016.

Outgoing IAI CEO Joseph (Yossi) Weiss said, "2017 was a year of turning points and achievements in IAI's business operations. The net income reported by the company is the highest in recent years, and the scope of new transactions signed in the past year totaling $5.8 billion is the highest in IAI history, and reinforces its position in the frontline of homeland defense and aerospace companies across the globe. The growth in engagements has led to a huge increase of some $2.2 billion in order backlog, which is also expected to be expressed in a major boost in sales in the coming years.

"Simultaneously, IAI is reaping the fruits of the growth plan signed in the company about 18 months ago. We have identified great potential in the different markets worldwide with a growing demand for providing advanced solutions that address changing global threats. We will continue to make extensive investments in R&D activities and globally expanding IAI's business development efforts, including M&As aimed at improving the company's global technological and business foothold to secure its position in the world."

Published by Globes [online], Israel business news - www.globes-online.com - on March 27, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Joseph Weiss Photo: Kfir Ziv
Joseph Weiss Photo: Kfir Ziv
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