Strong sales in Asia offset Elbit’s weakness in America

18 May, 2016

Elbit's revenues increased by 2% during Q1 2016. Asia pacific is now the company’s main market, while sales in North and South America decline

Elbit’s revenues increased by 2% during Q1 2016. Asia pacific is now the company’s main market, while sales in North and South America decline

Elbit's Hermes 900 UAV
Elbit’s Hermes 900 UAV

Elbit’s revenues in Q1 2016 increased by 2% to $721.2 million compared to $706.6 in the same quarter last year. The company’s main market this quarter was Asia Pacific, contributing 29.5% of the income. The increase in sales in Asia helped to offset a 12% decline in North America. North America was Elbit’s main market in 2015. The Aviation and intelligence and cyber systems divisions continue to lead the company’s sales.

Thanks to a reduction of operational costs and a wide product range, Elbit succeeded to increase its net profit rate to 29.4% of the revenues, compared to 28.5% in Q1 2015. The company’s net profit in Q1 2016 totaled $212.2 million compared to $201.1 last year.

President and CEO Bezhalel Machlis
President and CEO Bezhalel Machlis

Elbit executives are very optimistic as for future revenues.  This optimism is based on very good order backlog data – In March 2016the backlog of orders amounted to $6.8 billion. 63% of the order backlog will be delivered in 2016 and 2017. Elbit’s President and CEO Bezhalel Machlis said that “We are pleased with our first quarter financial results, especially our solid growth in backlog which provides us with strong revenue visibility over the long term.

“We are also encouraged by the gradual trend, over the past few years, of improving gross margins which is as a result of the efforts we have taken to operate efficiently, improve internal processes while harvesting synergies across our various business units.  The ongoing growth in the backlog coupled with an improving environment for defense spending throughout the world, positions us well to continue our long-term growth for the foreseeable future.”

Research and development expenditures in Q1 2016 amounted to $56.0 million, 7.6% of revenues.

Asia Pacific’s rise, the Americas decline

A geographical breakdown of sales reflects the trends that were already evident in 2015 – the Asia Pacific market is growing and becoming the company’s main strategic market, while Latin America – previously an emerging strategic market for Elbit – continues to decline. The political and economic turmoil in Brazil and other Latin American countries might entrench the current trend.

Asia Pacific was Elbit’s main market in 2016, contributing a $212.7 million income, 29.4% of Elbit’s total revenues, compared to $175 million in q1 2015. Meanwhile, the South and North American markets declined rapidly in Q1 2016. North American sales decline by 12% to $178.1 million compared to $203 million last year. Latin American sales dived by 27% to $63.1 million.

Elbit’s aviation division contributed $284 million in sales – 39.4% of the company’s income, while the ICT division contributed $221 million.

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Posted in: Aerospace & Defense , News

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