A recovery in demand for executive jets led to a further increase in IAI's revenues and profit

A recovery in demand for executive jets, maintenance services, and aircraft conversion led to a further increase in IAI's revenues and operating profit in the third quarter of 2021.
IAI, which is managed by Boaz Levy, earned $ 28 million in the third quarter of 2021, a decrease of 3% compared to the same quarter in 2020. IAI's revenues grew by 3.5% in the last quarter compared to the same quarter in 2020 and amounted to $ 1.04 billion. The increase in the Company's revenues was due, among other things, to an increase in the revenues of the Military Aircraft Division, which develops and manufactures unmanned aerial vehicles. The revenue of the Aviation Division, which manufactures and assembles executive jets for civilian and military aircraft and is engaged in the conversion of passenger aircraft to cargo and the improvement of avionics systems of military aircraft, has also increased.
The increase in revenues of the military aircraft and aviation divisions was offset by a decrease in the revenues of the Elta Brigade, which manufactures military electronics systems, including ground, airborne and naval radars and electronic warfare systems. 2020, reaching $ 790 million, which is 76% of turnover compared to 70% of turnover in the corresponding quarter in 2020.
IAI's gross profit increased by 13% in the last quarter compared to the corresponding quarter in 2020 and reached $ 149 million, which is 14% of turnover compared to 13% of turnover in parallel in 2020. The increase in IAI's profit and gross profit in the third quarter of 2021 was due to an increase in sales and profits of executive aircraft and conversion aircraft operations and of the Missile and Space Systems Division - which develops and manufactures naval attack missiles, anti-naval and surface-to-surface missiles and surveillance and communications satellites. These factors were partially offset by a decrease in the gross profit of the Elta Division.
IAI's operating profit increased by 44% in the third quarter of 2021 compared to the corresponding quarter in 2020 and amounted to $ 52 million, which is 5% of turnover compared to 3.8% of turnover in the corresponding quarter in 2020. IAI's operating profitability rate is significantly lower than that of Elbit Systems, which in the third quarter of 2021 posted an operating profit of 8% of turnover based on US GAAP and 9% of turnover on a non GAAP basis.
The Aviation Division recorded the most notable operating improvement, when it moved to an operating profit of $ 1 million in the last quarter compared to an operating loss of $ 22 million in the corresponding quarter in 2020. The operating improvement was due to a 15% increase in revenue to $ 306 million in the third quarter of 2021. This is due to the recovery from the corona crisis in the executive aircraft industry and in the field of aircraft conversions, which was offset by a decrease in aviation parts revenue.
Another division that has recorded a significant improvement is the military aircraft division - its operating profit increased by 56% in the third quarter of 2021 compared to the corresponding quarter in 2020 and amounted to $ 14 million. This is as a result of a 47% increase in revenue to $ 132 million, thanks to an increase in the rate of progress in projects in the division and revenue consolidation of Blue Bird, a company that produces unmanned aerial vehicles for the military and civilian market and was acquired in March 2021 for $ 8 million. The company contributed $ 20 million to IAI's revenues in the two quarters that have passed since its acquisition
The improvement in the operating profit of the military aircraft and aviation divisions was partially offset by a significant decline in the profits of the Elta Brigade. Elta's operating profit fell 40% in the third quarter of 2021 compared to the same quarter in 2020 and totaled $ 17 million. This is due to an 11% decrease in Elta's revenues to $ 330 million, as a result of a decrease in revenues in airborne systems, air defense and land systems.
IAI's net profit declined despite the increase in operating profit last quarter, due to the fact that in the third quarter of 2020 other revenues of $ 8 million were recorded - while in the last quarter other revenues of only $ 2 million were recorded from capital gains on fixed asset sales and a related company holding transaction. Another factor in the decline in net income was beyond a loss of $ 2 million, which IAI converted into the investee companies in the third quarter of 2021 - compared to a profit of $ 2 million from this source in the corresponding quarter in 2020.