Elbit eyes Europe and the Pacific markets

22 March, 2016

Elbit's revenues surpassed $3 billion in 2015. The Israeli defense giant has defined new strategic markets: Southeast Asia and Europe

Elbit’s revenues surpassed $3 billion in 2015. The Israeli defense giant has defined new strategic markets: Southeast Asia and Europe

Hermes 900 drone to be supplied to Switzerland

Elbit Systems sales in 2015 totaled approx. $3.1 billion, compared to a $2.9 billion in 2014. The main contributors to the revenues were the airborne systems and C4ISR systems. The company reported (21.3.2016) growth in land system sales, due mainly to the sale of fire control system for tanks and night vision systems to customers in Southeast Asia.

The increase in the land systems area of operation was primarily due to increased revenues from tank fire control systems and electro-optic night vision systems sold to Asia-Pacific. Revenues from C4ISR systems decreased slightly due to decline in sales of command and control systems, mainly for homeland security applications in Latin America.

Year-end order backlog by the end of December totaled $6.56 billion, compared to $6.26 billion in 2014.

68% of the company’s order backlog is from foreign customers. Approx. 68% of the order backlog is to be produced and delivered in 2016-2017.

Improving operational efficiency

Bezahlel Machlis

Bezahlel Machlis, Elbit president and CEO, said that the improvement in revenues and net profit in 2015 was achieved due to improvement of profitability in all business activities. “We have closed the year with a record year-end order backlog. The constant growth of our order backlog in recent years has contributed to the current trend of revenue growth. The efforts we have made to ensure operational efficiency and to increase synergy between operational units have made this improved profitability possible.

“In 2015, we witnessed a strong renewal of interest in our technologies and defense solutions in Europe, recently winning a number of important contracts in the region, which creates the potential for additional growth in this important market. Our results also reflect strong performance in Asia-Pacific, a region with emerging defense requirements that has been a strategic focus for us in recent years.”

Less Latin America, more Europe and Asia

Elbit’s cyber Simulator

Behind Machlis’s statement lies a change in Elbit’s growth areas. In recent years, Elbit has defined the South American market a strategic market, but now this strategic market seems to weaken. Two months ago it was decided to dissolve the subsidiary Harpia Sistemas owned jointly by Brazilian Embraer Defesa e Seguranca and Elbit’s Brazilian subsidiary. The company was founded in 2011 in order to examine the Brazilian drone market. It has been dissolved due to the massive reduction in Brazilian military expenditures due to the acute financial crisis.

Sales in Asia has increased and Elbit has won major projects in Europe: in January, the Affinity Flying Service Limited project in which Elbit and KBR cooperate, won the RAF Flying Training Systems. Elbit and KBR, each holding 50% of Affinity’s stocks, will provide support and enjoy the benefits in equal share. Affinity’s sales are expected to amount to $713 million in over an 18 year period due to the project.

In November 2015, Elbit received a $200 million contract to supply the Swiss Federal Department of Defense with Hermes 900 unmanned aircraft systems as well as advanced ground command, control and communication systems.

In December 2015, Elbit’s subsidiary Cyberbit received a contract to provide Swiss RUAG Defence with its Cyber security Trainer and Simulator Cybershield. The sum of this contract was unsubstantial, and the Trainer/Simulator will be supplied in the next few months.

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