Israel Aerospace Industries registers record results, but braces for global political backlash
Israel Aerospace Industries registers record results, but braces for global political backlash
The IAI concluded 2023 with a 7% growth in sales to $5.3 billion and a 49% jump in net profit. However, the defense company stated that its status may be affected by the international political attitude towards Israel
Israel Aerospace Industries (IAI) registered record results in 2023, with a growth in revenue and profit and a significant increase in the order backlog. The state-owned defense company concluded the year with a 7% growth in sales that rose to $5.3 billion. The net profit jumped by 49% compared to the previous year to $318 million, which is 6% of the sales. The increased backlog of IAI orders is also significant compared to the end of 2022, jumping by 19% to an estimated $18 billion.
In 2023, IAI slightly increased its share of sales to the Israeli market, to 29% compared to 27% in 2022. Its sales to the local market were affected in the last quarter by the war in Gaza, which led to a wave of orders from the Ministry of Defense, from defense industries that increased their production rate, alongside the supply of armaments and weapon systems to their customers across the world.
In the fourth quarter of this year, sales increased by 6% compared to the corresponding quarter in 2022 and amounted to $1.5 billion. The net profit in the quarter jumped 7.2 times and amounted to $79 million.
At the same time, IAI accelerated the development of systems and delivered them for operational use in the IDF, including autonomous systems used by army units as part of extensive maneuvers throughout the Gaza Strip.
"Israel Aerospace Industries’ financial report for 2023 well reflects a year of significant and varied activities – one in which the country was at war during the last quarter," said CEO Boaz Levy. "The mobilization of our employees for wide-ranging and intense work in support of Israel’s defense establishment, and not least, our activities for our foreign clients, have brought about groundbreaking results in what has been a challenging year. The considerable increase in R&D is noteworthy and its results can be seen every day, even during the current Iron Swords conflict. We are proud that this year too our partners and customers abroad are expressing their confidence in IAI’s advanced systems, solutions which express the spirit of innovation, professional commitment and dedication that characterizes the men and women employees of the company.”
The 2023 financial reports published by the IAI include for the first time revenues from the sale agreement of the missile defense system, Arrow 3, to Germany in a total amount of NIS 14 billion ($3.58B).
The report referred for the first time to the influence of the country's foreign relations on its business activities, and this, against the backdrop of the ongoing war in Gaza, which is now in its fifth month.
According to the company, "the position of the company, being a government-owned company, may be affected by Israel's political position in the world. At this time, the country's international position is affected by the war in Gaza and the ongoing proceedings at the International Court of Justice in The Hague.
"Among other things, certain countries in Europe have announced the suspension of supplies of components intended for the defense industries."
The company added and stated that in recent months it has received notices from foreign insurance companies about reducing the scope of its insurance coverage or removing it due to war and terrorist damage. According to the IAI, it has alternative coverages, even if on a smaller scale, and there is a regulatory infrastructure for receiving compensation in the event of damage through the property tax law and the compensation fund.
