The weakness in civil aviation because of the coronavirus pandemic is also affecting defense company Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT). Elbit has announced that in its third quarter financials, due to be released in November, it will recognize impairment of assets and inventory write-offs amounting to about $60 million.
The company says that these non-cash expenses will be recorded mainly in the "Cost of Revenues" line item in the Consolidated Statement of Income and will be eliminated in the non-GAAP results as a category of expenses that are not part of its regular on-going business.
"The significant slowdown in commercial air traffic, and the expectation that a commercial air traffic recovery to 2019 levels will likely take a number of years, have reduced the demand for products and services for the commercial aviation markets. Additionally, manufacturers of aircraft for these markets have announced plans to reduce production rates to adapt to the lower demand," Elbit Systems' announcement said.
Elbit Systems supplies various systems and products to the civil aviation industry, such as avionics systems, vision systems, communications systems, and more. This activity is partly based in Israel and partly in the US, and it derives from, among other things, the $120 million acquisition of US company Universal Avionics in 2018.
Elbit Systems, headed by Bezhalel Machlis and controlled by Michael Federmann, has a market cap on Nasdaq and in Tel Aviv of $5.3 billion.
Published by Globes, Israel business news - en.globes.co.il - on October 26, 2020
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