Eyeing Russia's Neighbors, Israel's Arms Industry Makes Multi-million Profit

State-owned Israel Aerospace Industries is concentrating its efforts on trade in Europe, focusing mainly on Germany and countries neighboring Russia, while cashing in on post-COVID demand for commercial aviation

Avi Bar-Eli
Avi Bar-Eli
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A HAROP unmanned air vehicle (UAV) or drone, manufactured by Israel Aerospace Industries on display In the Paris Air Show in Paris, France.
A HAROP unmanned air vehicle (UAV) or drone, manufactured by Israel Aerospace Industries on display In the Paris Air Show in Paris, France.Credit: Balint Porneczi / Bloomberg
Avi Bar-Eli
Avi Bar-Eli

The Israel Aerospace Industries is continuing to enjoy the boom in the global arms industry, showing record quarterly financial results between January and March 2022.

Following the Russian invasion of Ukraine, the government-owned company has taken aim at the European market, and is now considering increasing its presence in the countries neighboring Russia by acquiring other firms and building new marketing platforms, Amir Peretz, the chairman of IAI and former defense minister, told TheMarker.

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A special focus is placed on Germany, which is expected to add 100 billion euros to its defense budget.

Boaz Levy, the CEO of IAI, said he hoped the Germans would soon agree to the purchase of the Arrow 3 anti-ballistic missile interceptor system, a deal that according to foreign sources is estimated to be worth 2 billion euros. IAI is also competing to sell its Barak 8 missile defense system to Finland.

Additionally, IAI will reinforce its efforts to sell to the Arab countries that have signed normalization agreements with Israel, said Peretz. According to foreign reports, Morocco has already agreed to buy the Barak MX antiaircraft and missile interceptor system from IAI for about $600 million.

As a result of these dealings, the aerospace giant amassed a total of $14 billion worth of orders yet to be fulfilled in the last quarter – the equivalent to three years of business. Seventy-seven percent of orders came from customers outside of Israel, while the company also saw a 13 percent rise in sales in the last quarter.

IAI's sales climbed by 18 percent in the first quarter of 2022 to $1.2 billion, thanks, in part, to the missile and space systems division, which was responsible for 43 percent of IAI’s sales in that quarter, and mostly because of a one-time payment from the sales of the Barak 8 system to India.

A surprising contribution came from the aviation division, which moved from an $8 million quarterly loss to a $5 million profit in the first quarter. The division’s revenues skyrocketed by 37 percent to $325 million, because of the boom in converting civilian planes and business jets in the “post-coronavirus” era of travel.

IAI finished the quarter with an 86 percent jump in net profit to $78 million – and an operating cash flow of $284 million, compared to only $167 million in the same quarter of 2021.

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