IAI presents a weaker second quarter than the first in 2022, with a 12% drop in net profit to $51 million

IAI presents a weaker second quarter than the first in 2022, with a 12% drop in net profit to $51 million, and an increase of only one percent in sales, to $1.159 billion. Despite this, thanks to the successful first quarter, the company still presents a first half with record results, with a 9% increase in revenue to 2.359 billion dollars, and a net profit of 129 million dollars. The company explains the decrease in profit in one-time tax payments.
The results do not yet reflect the dividend that IA will pay to the state this year, in the amount of NIS 655 million, and will be recognized in the third quarter. The results also do not yet reflect the bonus to employees that the company intends to pay for its profits as early as 2021, worth several tens of millions of dollars, and is supposed to serve as a precedent for payment Bonus on profits in the following years as well.'
Despite the expectation of a large jump in the defense procurement of European countries following the war in Ukraine and the fear of further hostile activities by Russia, the sales of military equipment in Europe increased in the second quarter by only 12%, to 183 million dollars, an increase at a lower rate than in the first quarter this year. Expectations Mega deals with Germany, for example, for the purchase of air defense systems such as the Hatz-3 have yet to materialize. However, Boaz Levy, CEO of the Israel Defense Forces, told Ynet that "I estimate that this deal will be signed in a reasonable period of time."
IAA continues to rely on the sales of its military divisions, which produce air defense systems, unmanned aircraft and satellites, which fell in the second quarter by one percent to $959 million. The sales of the aviation division, which targets the civilian market, fell by 3%, to $320 million , mainly due to a decrease in sales of components to other aircraft manufacturers produced by the division.
The net profit of the military divisions in the second quarter amounted to approximately 82 million dollars, an increase of 17%, and that of the aviation division was 22 million dollars, after a loss of 6 million dollars in the corresponding quarter last year. The aviation division has for years been a constant source of losses, but this year it shows two profitable quarters in a row, a matter not remembered for decades.
An optimistic point: the TAA's order backlog reached a peak of $14.1 billion after the second quarter, compared to $14 billion at the end of the first quarter, and $13.4 billion at the end of 2021.
The delay in issuing 25% of the company's shares hurts the company, which was supposed to receive from the move about a billion shekels for procurement, research and development, and reduce the rate of taxes it pays. As a fully government-owned company, IAA is subject to corporate tax at a rate of 23%, and does not receive the benefits of the law to encourage capital investments, which will open to it as soon as a private entity owns a share of it, which will reduce the tax rate to 6 to 15 percent.