Last-minute Deals Push Annual Israeli Defense Exports to $5 Billion

The market is tough amid factors including a freeze on deals in Brazil and regime change in India.

Elbit Systems

Defense exports received a boost from last-minute deals in December, pushing the total for last year to $5 billion, the Defense Ministry said Tuesday.

The ministry had previously announced the annual number at $4.5 billion, less than the figure for 2014. But several deals that went through in December kept the final figure from decreasing.

Defense exports faced a tough year due to factors including greater competition abroad, a freeze on deals in Brazil for political reasons, and delays in India due to regime change. There were also tightening defense budgets coupled with an increasing preference for local manufacturers in many countries following the financial crisis.

Three months ago, the heads of Israel’s defense companies met with Finance Minister Moshe Kahlon as Israel’s defense budget was being finalized. At the meeting they said defense exports were set to drop.

At the time, their figures indicated that exports for 2015 would total only $4 billion, compared with $5.66 billion in 2014.

They also provided profitability statistics for Israel’s defense firms. The figures for Elbit, Israel Aerospace Industries, Rafael Advanced Defense Systems and Israel Military Industries were 4.5% to 5.5%, versus 8% to 9% for defense companies around the world.

According to their presentation, Israel’s defense industry includes some 600 companies, most of them small or mid-sized. The industry directly employs around 50,000 people and is responsible for 15% of Israel’s industrial exports and 3% of GDP.