Elbit Systems Q3 adjusted net profit up


Israeli defence electronics group Elbit Systems Ltd reported higher adjusted third-quarter net profit that beat expectations, boosted by acquisitions and strong sales in the United States, South America and Asia-Pacific.

Joseph Ackerman, president and chief executive, attributed the improved results in part to synergies from recent acquisitions and said Elbit would continue to take advantage of opportunities in cost rationalisation and savings.
“Our geographical spread and our diversified activities enable us to adjust ourselves to changing trends in the global markets and we are successfully growing in regions with expanding potential like South America and Asia-Pacific,” he said on Wednesday, Reuters reports.

Elbit’s shares were up 1.4 percent to 162.20 shekels in afternoon trade, well outpacing marginal gains in the broader Tel Aviv market. The stock rose as high as 164.00 shekels, its highest since July.

Leumi Capital Markets analyst Ella Fried said Elbit’s results were a “moderately positive signal” but major uncertainties remained over defence spending in the United States, where she noted most of the company’s growth had come from and which accounted for 34 percent of revenue, or $225 million.
“Our eyes are focused on defence discussions in the U.S. Congress, the success of which will have a major impact on the Western defence industry,” she said. “We are cautiously optimistic regarding an agreement being reached.”

Elbit, which specialises in electronics, intelligence technology such as unmanned air vehicles and command and control systems, said quarterly net profit excluding one-off items rose to $56.4 million from $54.1 million.

Analysts on average had expected Elbit to earn $51 million, according to Thomson Reuters I/B/E/S.

Revenue increased to $663.7 million from $649.9 million, with airborne systems accounting for 35.4 percent.

UBS analyst Ziv Tal said revenue was 6 percent below his estimate due to lower sales in Israel.
“Strong U.S. sales and continued momentum in Latam and Asia covered for weakness in Europe as well as slower delivery in Israel,” he said in a note to clients.

The company’s backlog of orders increased to $5.69 billion from $5.45 billion at the end of 2010. Tal said the order book implied a 4 to 5 percent rise in sales in 2012.
“Assuming 70 percent of sales are generated from the order book, we arrive at 2012 sales of $3 billion,” he said. “We believe that the main risk to 2012 sales estimates are a potential cut in Israel’s defence budget.”

Elbit will pay a dividend of 36 cents a share for the quarter, the same as in the previous three months.