Elbit Systems Ltd. (Nasdaq: ESLT; TASE:ESLT) is one of Israel's three major defense systems manufacturers but unlike Israel Aerospace Industries Ltd. and Rafael Advanced Defense Systems Ltd., it is not government owned. This provides Elbit with more managerial flexibility than its two big domestic rivals.
Elbit's growth in profitability in 2021 reflects the overall growth in the global defense market as well as Elbit's success in focusing on products that are in demand like the Sigma artillery system, electronic warfare systems and protection against them, precision strike guided missiles and rockets for ranges of 40-150 kilometers and various types of launchers.
In the field of unmanned aerial vehicles the Hermes is Elbit's most outstanding product and it has already been sold to several armies worldwide. The uniqueness of the Hermes is its ability to undertake prolonged long-range missions combined with its high-resolution surveillance and tracking resolutions.
The war in Ukraine has sped up the global armaments process and in particular the main increase in arms buying is by the rich countries of the West. Countries in Europe as well as NATO at an organizational level are re-equipping themselves and buying completely new weapons systems for their militaries.
Germany, for example, has already doubled its defense budget and countries like Finland, Poland, Moldova, Romania, Latvia, and others have also vastly increased military spending. These armies are seeking missile defense and assault systems, and unmanned aerial vehicles as well as communications and electronic warfare systems, and more traditional weapons like artillery and rockets, but with tech systems that make them much more precise.
One of the future products that will likely be a main weapon in the wars of the coming decades is the laser. Elbit is developing a laser cannon that is likely to serve mainly as a defense system against missiles, rockets, UAVs and drones - protecting both aerial vehicles and airspace and entire regions. If Elbit succeeds in overcoming the technological challenges, it will bring the science fiction concept of star wars movies to the future battlefield.
For Israel all this means more than the biggest taxes that Elbit will pay on its profits. Overseas sales allowed continued bigger investment in R&D in order to remain in the forefront of the world's defense industries and maintain Israel's qualitative advantage over its enemies. This advantage is strategic and at all meetings between heads of state, including at the Arab foreign ministers summit this week in the Negev, Israel fields requests for procurement and technological collaboration. Elbit Systems and other Israeli defense industries have tens of thousands of employees and a significant part of Israel's entire tech sector can be found in the defense industries.
Published by Globes, Israel business news - en.globes.co.il - on March 29, 2022.
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