Ashkelon Defense Firm Reports 7% Rise in Q1 Profit Amid Soaring Military Demand

Ashkelon Industries, a key Israeli defense manufacturer controlled by the FIMI Opportunity Fund (84%), reported a 7% increase in net profit for the first quarter of 2025, reaching NIS 15 million, amid heightened demand driven by the ongoing war in Gaza and the expansion of the Israel Defense Forces’ (IDF) armored vehicle fleet.

The growth in profit was primarily attributed to the consolidation of IDC, a defense contractor acquired in August 2024, which manufactures key components for Merkava tanks and NAM armored vehicles, and develops systems for a major international chip company.

While the company’s pro forma net profit — assuming IDC had been acquired a year earlier — showed only marginal growth of 0.2%, Ashkelon’s overall performance in Q1 underscores the impact of expanding defense needs and its evolving product portfolio.

Strong Revenue Growth Across Defense and Aviation Segments

Ashkelon’s total revenue rose by 25% year-over-year, reaching NIS 121 million. The military segment contributed NIS 80 million, up 25%, fueled by IDF orders for propulsion systems, suspension components, and armor penetrators used in high-impact ammunition.

The IDC acquisition added NIS 6 million in military revenue during the quarter, and missile assembly contracts with major Israeli defense firms also contributed to the increase.

The aerospace division generated NIS 39 million, a 26% jump from the prior year, benefiting from a global rebound in aircraft demand following the COVID-19 slowdown. However, gross margins in the aerospace segment declined sharply to 13.5% (from 21.4%) due to timing of revenue recognition, though the company expects this to normalize over 2025.

Subsidiary and Profit Margins

Ashkelon’s U.S.-based subsidiary, Reliance Gear, which supports both the military and aerospace sectors, saw external sales rise by 12% to NIS 3 million.

Despite the erosion in aerospace margins, gross profit grew 22%, reaching NIS 26 million, with a slight decline in gross margin from 21.8% to 21.2%. Operating profit increased by 34%, totaling NIS 18 million, driven by higher sales and reduced administrative costs.

Order Backlog Nears NIS 1.3 Billion

Ashkelon reported a 4% increase in its order backlog, now totaling NIS 1.3 billion in firm commitments — even after a quarter of strong revenue growth.

The company highlighted that 2024 saw a sharp rise in orders from the Ministry of Defense, particularly for maintenance, restoration, and spare parts, with expectations for continued and intensified demand throughout 2025 and beyond.

Ashkelon CEO Eli Damari emphasized the Ministry of Defense’s commitment to local production capacity and strategic self-reliance in defense manufacturing — a trend that positions the company for sustained long-term growth.