Isranomics

Elbit Systems Secures $760 Million in Defence Contracts

by | May 21, 2024 | Company Reporting | 0 comments

The ongoing conflict continues to drive demand for defense products, significantly benefiting companies like Elbit Systems. Today, Elbit announced to the stock exchange that it has secured multiple contracts, amounting to approximately $760 million, to supply ammunition to the Israeli Ministry of Defence. These contracts are set to be fulfilled over the next two years.

Increased Demand from the Ministry of Defence

Elbit Systems noted a significant surge in demand for its products and solutions from the Israeli Ministry of Defence since the onset of the war with Hamas. The company indicated that, depending on future developments, this heightened demand could persist, potentially leading to further substantial orders.

The exact timeline of these orders was not disclosed. However, in a related statement, the Ministry of Defence highlighted efforts to enhance production independence in Israel by purchasing weapons systems from Elbit worth NIS 2.8 billion. This procurement is part of a broader strategy to ensure that production goals are met, with ammunition being manufactured at Elbit facilities nationwide, which have ramped up operations since the war began.

Strategic Procurement and Economic Impact

The Ministry of Defence’s statement emphasized the expansion of “Blue and White” procurement operations at the war’s onset. This initiative aims to bolster the IDF’s capabilities and ensure sustained production in critical areas while supporting the Israeli economy. Since the war started, the Ministry’s procurement activities have totalled tens of billions of shekels, with over half of these purchases sourced from Israeli suppliers.

Elbit’s Growing Order Backlog

At the end of 2023, Elbit’s order backlog reached a record $17.8 billion, up from $15.1 billion the previous year and $16.6 billion before the war. The company is scheduled to report its first-quarter results next week, which are expected to reflect this growth.

Recent Contract Wins and Future Prospects

In recent months, Elbit has announced several major contracts, including a $600 million deal in Australia for APC systems and a contract worth up to $500 million for supplying night vision binoculars in the United States. At a recent investor conference, CEO Bezalel Machlis expressed confidence in the company’s strategic direction. He reiterated goals of achieving 10% operating profitability and supporting sales of $6.5-7 billion by 2026, citing global tensions and increased defence budgets as contributing factors.

Market Performance

Despite the growth in activities and order backlog, Elbit’s stock price remains stable, trading at levels similar to a year ago. The company, valued at $8.7 billion, is listed on both Nasdaq and the Tel Aviv Stock Exchange.

Elbit’s substantial new contracts and increased demand from the Israeli Ministry of Defence underscore the significant role the company plays in the military sector, particularly during times of conflict. As geopolitical tensions continue to rise, Elbit is well-positioned to capitalize on the growing defence budgets worldwide.

Image credit: IronVision, Elbit Systems

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