Israel Aerospace Industries (IAI) last week released third quarter financial results showing $877 million in quarterly sales, up 10 percent from the same period last year, and a backlog standing at $7.44 billion.
Nine-month sales for the period ending Sept. 30 reached $2.8 billion and were up 17 percent compared to the same stretch in 2007. Sales to the civil market accounted for 40 percent.
“Despite the slowdown in the international civil aviation market and the difficulties still ahead, IAI will continue to strengthen its position among existing customers, while exploring new businesses and opportunities,” Yair Shamir, IAI’s chairman said.
“IAI enjoys financial robustness, unique product lines and a diverse clientele…factors that help prepare IAI to cope with the global economic turmoil,” he added. “We also hope to capitalize on business opportunities that will present themselves as a result of the situation.”
IAI’s third quarter net income was $16 million, after a $16 million provision for employee-related expenses, compared with $6 million employee-related expenses for the third quarter of 2007.
The company said that from the beginning of 2008 it has continued to demonstrate impressive technological achievements, including successful launches of the TECSAR satellite and the AMOS 3 communications satellite.
IAI also pointed to the development of a new G-250 executive jet in collaboration with General Dynamics [GD] Gulfstream Aerospace, headquartered in the United States.
IAI said it is continuing to focus on developing international partnerships and on enhancing its presence in global markets. Agreements have been signed for the establishment of a joint company with India’s TATA, the establishment of a joint company with Brazil’s Synergy and a cooperation agreement in Europe with Germany’s Rheinmetall.
The weakening of the dollar during the reporting period has adversely affected the operating activities of IAI, whose major income is in U.S. dollars. IAI said it continues to carry out numerous activities to increase efficiency and project management and control with a view to minimizing the anticipated adverse effect from the global market crisis.
IAI announced $161 million in profit for the first nine months of 2008, before expenses relating to early retirement of employees, totaling $ 41 million for the period. This profit exceeds the profit for the third quarter of 2007.
During this quarter a dividend of about $53.3 million was paid to the State of Israel for the years 2006 and 2007.
“Cash flow from current operations in the reporting period totals $164 million compared to $129 million in the same period last year,” Menashe Sagiv, IAI’s CFO, said. “The company’s financial expenses for the quarter total $ 41 million, a direct result of the weakening of the [U.S. dollar] by 11 percent from the beginning of 2008 to September 30, 2008. This resulted in a $43 million revaluation of Shekel liabilities in the reporting period.”
IAI said it has conducted and continues to conduct currency-hedging operations that have reduced the effect of the revaluation in the period.
The company also said it achieved a 17.5 percent return on capital over the last 12 months. IAI said shareholders’ equity continues to grow as a result of internal activity and not from acquisitions and mergers.