IAI’s first quarter net income down 76% from last year

Israel Aerospace Industries (IAI), Israel’s largest national military and civilian security defense company, has issued its consolidated financial statements for the three months ended March 31, 2018.

The Company’s sales in Q1 2018 amounted to US$ 883 million compared with US$ 837 million in Q1 2017, an increase of 5.5%.

Operating income in Q1 2018 amounted to US$34 million (3.8% of sales) compared with US$44 million in Q1 2017 (5.3% of sales). This decrease can be explained by the increase in R&D expenses and in general and administrative expenses compared with the corresponding quarter of last year.

EBITDA in Q1 2018 amounted to US$75 million compared with US$72 million in Q1 2017.

Net financial expenses in Q1 2018 amounted to approximately US$17 million compared with US$7 million in Q1 2017. The increase in net financial expenses compared to the corresponding quarter of last year is mainly a result of exchange rate valuation losses due to the erosion of NIS asset balances and the ineffective portion of foreign exchange hedges in view of the appreciation of the US$ exchange rate in relation to the NIS by about 1.4% in the first quarter of 2018 as opposed to a depreciation of 5.5% in the corresponding quarter of last year.

Net income in Q1 2018 totaled US$11 million (1.2% of sales) compared with net income of US$46 million in Q1 2017 (5.5% of sales). The decrease in net income mainly arises from the decrease in operating income and the increase in financial expenses and in tax expenses.

The order backlog at the end of Q1 2018 amounted to US$12 billion compared to US$11.2 billion at the end of 2017. 76% of the order backlog is held for sale to foreign customers with wide geographical dispersion. The order backlog is comprised of a wide variety of products and secures 3.2 years of operation.

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