For the third successive year, Israel Aerospace Industries (IAI) has recorded a rise in sales and profits, and, no less importantly, a substantial rise in EBITDA, which will boost its valuation in advance of the equity offering that the company hopes will get underway this year.
Sales in 2021 totaled $4.5 billion, the highest figure since the company was founded, and 7% higher than in 2020. Net profit was a record $148 million, 11% more than in the previous year, while EBITDA grew 10% to $436 million, again, the highest figure in the company's history.
The trend looks likely to be maintained in the immediate future, thanks to a rise in the orders backlog to $13.4 billion at the end of 2021 from $12.6 billion at the end of 2020. 78% of the backlog consists of orders from foreign customers.
Gross profit in 2021 was $696 million, up from $665 million in 2020, and amounting to 16% of sales in both years.
Within IAI, the Military Groups posted a substantial rise in sales and profits, and, in view of the conflict in Ukraine and commitments by European countries to greater defense spending, these groups are expected to continue to grow this year and in the coming years. IAI is one of Israel's biggest exporters, most of its sales (72%) being overseas, chiefly to armed forces of other countries.
The Aviation Group, on the other hand, continues to post losses. Its sales grew by 1% in 2021, while its net loss narrowed to $27 million from $32 million the previous year.
The company's R&D expenditure rose 5% to nearly $1.1 billion in 2021. At the end of the year, it had cash of $905 million.
The tax expense for 2021 was $46 million. IAI pays Companies Tax at the full rate of 23%, and as a state-owned company is not entitled to benefits under the Law for the Encouragement of Investment. The sale of even a small stake in the company to a non-government entity will allow it to claim such benefits.
Sources inform "Globes" that in the course of a tour of IAI yesterday, Minister of Defense Benny Gantz, commenting on this issue, said that he would promote the equity offering and help where there were obstacles.
IAI CEO Boaz Levy told "Globes" that in the light of the rise in profitability, the offering process would be expedited, and that he believed that the offering would take place in the second half of this year. The ball is currently with the Attorney General's office, which needs to complete the legal process.
"We have reported record performance in sales and profits, three years of substantial growth, which goes hand in hand with a successful offering. The offering will be good for the company, its employees, and the country, and so I'm sure that it will happen. We are working closely with the employees, the government ministries, and the Government Companies Authority. This is a win-win for everyone, and I believe that we will arrive at an agreement that is right for the company and the employees.
"The offering process is taking longer than we thought, and it's impossible not to think about how the share price would have risen had we already been on the stock exchange, but the offering will probably take place this year, in the third or fourth quarter."
Published by Globes, Israel business news - en.globes.co.il - on March 16, 2022.
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