Israel Aerospace Industries reported the strongest results in its history, with first-half net profit jumping 40% to $449 million from $320 million in the same period last year. In the second quarter alone, net profit rose 47% to $229 million, compared with $156 million in the corresponding quarter.
The state-owned defense company’s order backlog also climbed to an all-time high of $35 billion, up from $27 billion in the previous quarter. Sales rose sharply as well. First-half revenue reached $4.275 billion, compared with $3.88 billion in the same period last year. Second-quarter sales totaled $2.189 billion, up from $1.618 billion a year earlier.
IAI’s Missiles and Space Division, which produces the Arrow missile defense system, remained the company’s largest revenue generator and surpassed $1 billion in sales for the first time, marking a 38% increase from the corresponding period. It was followed by ELTA, IAI’s electronic warfare and radar systems subsidiary, and then by the aviation and military aircraft divisions.
All four divisions are profitable, and IAI currently has no loss-making business activity. The company’s operating profit rose 35% in the first half of the year. Exports accounted for 66% of IAI’s sales, while 34% came from Israel’s domestic defense market. Although local sales increased, the company’s international business grew faster.
IAI CEO Boaz Levy said the company was meeting every requirement set by the Defense Ministry and credited that performance with helping it retain its workforce. According to Levy, IAI ranks second among the best companies to work for in Israel, behind Nvidia.
He also said the company is not dependent on suppliers in France or Spain and has been able to develop Israeli alternatives for nearly every product when supply problems arise. Raw material supply, however, remains a challenge.
IAI CEO Boaz Levy
(Photo: Ryan Frois)
Levy said IAI’s long-planned initial public offering was now “closer than ever,” with significant progress made in discussions with the Defense Ministry. Among the issues nearing resolution is a confidentiality order intended to prevent classified information from being disclosed in reports on sensitive transactions. Progress has also been made with the Israel Securities Authority, Levy said, with final wording now being prepared.
The next stage is expected to involve talks with the Finance Ministry over how proceeds from the offering would be divided between the state and the company. The IPO is planned for the Tel Aviv Stock Exchange, with IAI expected to offer about 20% of its shares.
The company’s valuation is also expected to be updated following its strong second-quarter performance. Previous estimates had placed IAI’s value at about $20 billion. Levy also highlighted a successful Arrow missile test conducted last week, saying the system plays an important role in confronting the threat posed by Iranian ballistic missiles and could help open additional international markets for the company.