Rafael orders surge 85% to over $8 billion amid war, global arms race
Rafael orders surge 85% to over $8 billion amid war, global arms race
The backlog of orders for the state-owned defense company reached a record NIS 52.5 billion ($14 billion) last year. Rafael plans to hire about 2,000 new employees in the upcoming year to support a rise in production needs and accelerate development plans for new weapon systems
Israeli defense company Rafael reported record results for 2023, including an 85% increase in orders compared to 2022, totaling NIS 30 billion ($8.2 billion). This contributed to an order backlog of 47% and a total of NIS 52.5 billion ($14 billion). The state-owned company and the developer and manufacturer of the Iron Dome defense system, also increased its sales in 2023 by 21% compared to 2022 to a total of over NIS 14 billion ($3.8 billion). Its net profit last year rose by 17% to a total of NIS 588 million ($160 million).
Rafael's business results show that the last quarter of the year was particularly successful, totaling NIS 14.5 billion ($3.9 billion) worth of orders, compared to NIS 5.6 billion ($1.5 billion) in the fourth quarter of 2022. Although the defense industry was focused on supporting the needs of the Israeli military during this quarter, 61% of Rafael’s orders were from international customers. The company’s sales in the last quarter of 2023 amounted to about NIS 4.6 billion ($1.2 billion) - a 20% increase in sales compared to the year prior. 57% of Rafael's total sales in the last year were to international clients, with the remaining 43% from Israeli clientele.
Rafael's surge in sales is attributed to a series of large transactions, including its first export deal of the David Sling air defense system to Finland worth NIS 1.3 billion ($354 million), the sale of Spike anti-tank missiles to Greece for NIS 1.4 billion ($382 million), and the sale of Spike missiles from one of its subsidiaries to Spain for about $270 million.
Most of the deals that boosted Rafael's sales, backlog, and net profit in 2023 are attributed to the impact of Russia’s war in Ukraine, which increased demand worldwide, especially in European armies, for new weapon systems and air defense systems. Rafael estimates that the effect of the war in Gaza will be felt in the company's sales throughout the coming year.
Rafael plans to hire about 2,000 new employees in the upcoming year to support a rise in production needs and accelerate development plans for new weapon systems. Since the beginning of the war, similar to other major defense companies, Rafael has been operating in emergency mode around the clock to increase the supply of interceptors for Iron Dome and David's Sling, Spike missiles, and the Trophy active protection system for tanks and APCs used by the IDF.
Most of Rafael’s operations are conducted at various facilities in the north, and in the last quarter it was forced to relocate one of its factories in Shlomi and about 250 Rafael employees living in the area due to Hezbollah rockets attacking areas along the northern border. Rafael claims that this situation did not impact its supply capabilities to the IDF and its customers worldwide.
One of Rafael's main development plans for the upcoming year is the advanced laser-based interceptor system, Iron Beam. In recent months, some progress has been made which is expected to significantly enhance and reduce the costs of intercepting rockets and UAVs. Rafael utilized the war in Gaza to test the system and study its responses in various scenarios. However, their use of the system didn’t include operational interceptions. According to estimates, the development of the Iron Beam system will be completed by 2025, allowing for its operational deployment.
Apart from Iron Beam, Rafael is working on developing a defense system against hypersonic missiles, which are faster than the speed of sound and may challenge existing interception systems, such as the Arrow and David's Sling. The development of the system, SkySonic, was announced by Rafael last year.
Rafael's results come amid a rise in profits for other defense companies including Elbit Systems who reported on Tuesday an 8% increase in revenues in 2023, totaling $6 billion. It also reported an order backlog that has surged to $17.8 billion, a 17.5% rise from the previous year.
Rafael's results come amid a rise in profits for other defense companies including Elbit Systems who reported on Tuesday an 8% increase in revenues in 2023, totaling $6 billion. Italso reported an order backlog that has surged to $17.8 billion, a 17.5% rise from the previous year.to $271 million for the last quarter of 2022.
