Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) today published its financial report for the first quarter of 2009. Revenue fell 24% to $775 million for the first quarter from $1.01 billion for the corresponding quarter of 2008. Net profit fell to $15 million from $40 million, respectively.
IAI's orders backlog rose to $8.1 billion at the end of March, from $8 billion a year earlier. $4.4 billion of the backlog is due for delivery in 2009 and 2010. Cash flow from operations fell to $312 million for the first quarter from $396 million for the corresponding quarter.
The proportion of sales to the civilian market fell to 26% of total sales in the first quarter from 39% of total sales in the corresponding quarter.
IAI attributed the drop in sales to the halving of sales to the civilian market because of the global economic crisis to $204 million for the first quarter from $397 million for the corresponding quarter. Sales to the military market fell 7% to $571 million from $617 million. The company attributed most of the decline in military sales to a 25% drop in sales by its missile and space division, especially of air defense systems, to $193 million for the first quarter from $259 million for the corresponding quarter.
Avionics sales rose 10% to $142 million for the first quarter from $129 million for the corresponding quarter. Sales by subsidiary Elta Systems Ltd., a manufacturer of electric warfare systems, fell 15% to $236 million for the first quarter from $278 million for the corresponding quarter.
IAI made a provision of $16 million for the retirement of 90 employees during the quarter. The provision is part of the company's $80 million provision for the retirement of 350 employees by the end of 2009.
IAI chairman Yair Shamir told "Globes", "We intend to continue our streamlining measures, but not in the form of layoffs. We'll cut costs for energy, communications, foreign travel, exhibitions, overtime, and procurements. In any case, we're not firing employees, but carrying out early retirement nearly every quarter under a program that has been going on for three years. We're letting go older employees whose productivity is less than their pension, and replacing them with younger and more educated workers. We’ve hired thousands of employees in recent years."
IAI CFO Menashe Sagiv added, "We're not talking about cheaper workers, but more educated manpower who are more suited to the company's development as it produces ever more sophisticated products. Our products are much more software-rich than before."
Shamir noted, "IAI has strengths that help it cope with the global economic volatility, including financial soundness, geographically diverse customers, and a varied basket of products. We hope to exploit business opportunities that emerge as a result of the situation."
IAI CEO Yitzhak Nissan said, "IAI's management conducts operational oversight and streamlining activities in order to lower costs and meet targets. These measures are reflected in the higher gross profit margin, which rose to 17% for the first quarter from 13% in the corresponding quarter. In view of expectations that the crisis in civil aviation will persist, the company will continue and even expand its streamlining measures. We will also expand our marketing activity in the military sector."
Published by Globes [online], Israel business news - www.globes-online.com - on May 26, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009