Israel’s Largest Publicly Traded Defense Maker Has High Hopes for Trump Presidency

Business in Brief: Gov't orders banks to remove executives from boards of credit-card units; Teva faces suits connected with U.S. probes; Shares end week with day of listless trading.

The Hermes 900 unmanned aerial vehicle manufactured by Elbit Systems Ltd.
Bloomberg

Elbit has high hopes from Trump presidency

Elbit Systems on Thursday reported flat earnings and sales growth in the third quarter, but President and CEO Bezhalel Machlis said he had high hopes for the defense electronics maker after Donald Trump takes office in January. “We are entering a period of rising demands for our products,” he said. It is pretty clear that the U.S. defense budget will be growing after years of stagnation and that represents an opportunity for Elbit Systems, which has the right portfolio of products and U.S. subsidiaries that can meet the demand.” Machlis said demand in Europe should also grow if Trump meets his promise to make America’s NATO allies cover more of their own defense costs. Elbit, Israel’s largest publicly traded defense maker, reported net profit for the third quarter of $62.5 million, or $1.46 a share, virtually unchanged from $62.3 million a year earlier. Revenue edged up just 2%, to $780.8 million. Elbit shares, ended down 1.9% in heavy trading at 393.30 shekels ($101.93). (Yoram Gabison)

Gov't orders banks to remove executives from boards of credit-card units

The Bank of Israel late on Wednesday instructed Bank Hapoalim and Bank Leumi, the country’s two largest lenders, to replace bank executives now sitting on the boards of their credit-card subsidiaries with outsiders by March 31. The order, which has yet to be formalized, aims to prevent any conflicts of interest before the banks are forced to sell their credit-card businesses. “The objective of the guidelines regarding the changes to be made in the composition of the board of directors is to reduce this potential,” the central bank said in a statement. A pending draft law would require Hapoalim and Leumi to spin off their credit-card subsidiaries, IsraCard and LeumiCard, respectively, within three or four years as part of a government plan to introduce more competition into consumer lending. The banks have said the central bank’s instructions regarding the boards of directors are premature, given that the law has not yet been passed and the deadline to divest their holdings is years away. (Michael Rochvarger)

Teva faces suits connected with U.S. probes

Teva Pharmaceuticals faces several lawsuits in connection to two separate U.S. Justice Department probes into illicit practices. The drugmaker said this week it had set aside $520 million for a penalty it expects to pay for bribing local officials in Russia, Mexico, and Ukraine as the Justice Department and Securities and Exchange Commission investigate alleged violations by Teva of the U.S. Foreign Corrupt Practices Act. Israeli attorney Ram Dekel said Thursday he was seeking from Teva board minutes relating to the affair as well as clarifications about whether the settlement covers all the countries where the company allegedly made payments. Meanwhile, a host of U.S. law firm have filed class action suits after a November 3 Bloomberg News report that the department’s antitrust division is expected to make its first charge into a wide-ranging probe into price collusion in the generics market. Teva was one of about 24 companies cited in the report. Teva shares ended 1% higher at 147.50 shekels ($38.23). (Yoram Gabison)

Shares end week with day of listless trading

Tel Aviv shares posted another listless day of trading, with the two main share indexes ending the session barely changed. The blue chip TA-25 index traded sideways all day to end at 1,432.48 points, virtually unchanged, while the TA-100 squeezed out an 0.04% rise to 1,251.26. Some 1.25 billion shekels ($320 million) in shares changed hands. Delta Galil was the biggest gainer on the TA-100, adding 5.4% to 112.40 shekels a day after it reported strong third-quarter earnings. Frutarom marked a third day of big gains to finish up 1.1% at 211.50, Mylan led TA-100 shares lower, dropping 2.4% to 143.20. Energy shares were higher, paced by gains to 2.5% each for Avner and Delek Drilling to 2.48 and 13.30 shekels, respectively. Their parent company, Delek Group, rose 2.7% to finish the day at 774.10.  Isramco posted a 1.35% advance to 68 agorot. (Guy Erez)