Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) published its financial report for the second quarter of 2009. Net profit rose 16% to $22 million, up from $19 million in the corresponding quarter of 2008, even though revenue fell 25% to $667 million in the second quarter of 2009, down from $891 million in the corresponding quarter of 2008. The fall in revenue reflected the weakness of the commercial market, whereas sales in the defense market actually rose 4% in the second quarter of 2009 compared with the corresponding quarter of 2008.
Sources close to the company report that the small profit reflects the fact that IAI is a government company and is not easily able to implement mergers and acquisitions or layoffs in order to streamline in the way that a company in the private sector can.
IAI also reported a record orders backlog of $8 billion and cash and cash equivalents of $203 million.
IAI president and CEO Itzhak Nissan believes that the company's orders backlog will grow to $9 billion by the end of 2009 due to deals worth $1 billion that are close to being concluded for UAVs, radar and other electronic systems to country's in Asia and South America.
IAI chairman Yair Shamir said, "The global economic crisis influenced the company's activities in the commercial sector. The depth of the crisis was reflected by 68% fall in sales in this market compared with the corresponding quarter last year. The company's equity amounts to $676 million after paying a dividend of NIS 87 million ($22.5 million) to the state."
The company reported that implementation of intensive measures to streamline operations raised the level of gross profit in the first half of 2009 by 16% compared with the corresponding half of 2008, when there was a 14% rise compared to the corresponding half of the preceding year. This was achieved despite the slowdown in commercial activities. IAI also reported that in light of forecasts of the continuation of the global crisis in civil aviation, the company has stepped up its streamlining measures and is reorganizing human resources according to changing work demands.
Published by Globes [online], Israel business news - www.globes-online.com - on August 12, 2009
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