“IAI is ready for privatization, a move that will position it to better pursue a larger share of the global Aerospace and Defense (A&D) market, toward our goal in becoming a $10 billion company by the end of the decade.” Itzhak Nissan, President and CEO IAI tells Defense Update.
In 2010 IAI reported sales of $3.15 billion, out of an order backlog of $8.9 Billion, placing it at the the leader among Israel’s aerospace and defense industries. However, with net profit of $94 million its profitability is relatively low compared to its local and international competitors. In the first quarter of 2011 the quarterly net profit increased to 46 million, while the backlog slightly drop to $8.6 billion, of which 84 percent are attributed for export.
IAI’s high export ratio is high compared to European or American piers, averaging compared to an average of 30-40 percent of export, but they also exceed export levels of other Israeli companies such as Elbit Systems, Rafael or IMI, which usually maintain lower shares of export in their businesses. The majority of IAI’s business stems from large government-to-government (G2G) programs IAI has won in recent years. IAI also had relatively smaller share of the domestic land forces market. The establishment of a new business area is addressing this opportunity. Regardless of the cause, the high dependency in export exposes IAI to currency fluctuations, while its ability to expand operations overseas is limited by its current structure. The adverse effect of the devaluation of the US$ against the Shekel, the local Israeli currency.
IAI covers a broad spectrum of the most advanced technologies, from remote sensing from space, satellite launchers, special mission aircraft, sophisticated sensors, missile interceptors and advanced air defense systems, advanced naval systems, unmanned systems and robotics. “To sustain this portfolio we must invest in a broad technology base, and diversify our R&D investments over a wide range of technologies, especially in areas we want to be positioned as world leaders” Nissan explained.
“At the Paris Air Show 2011 we are showing part of the capabilities that have already evolved into mature products. This is only a small part of the unclassified part of IAI portfolio, we definitely have much more than we can show, and the company continues to invest in new technologies and new concepts, either its own money or as R&D investments as part of ongoing programs.” Nissan added.