May 29, 2018 / 8:43 AM / 10 months ago

UPDATE 1-Israel's Elbit counting on rising defence budgets after solid first quarter

(Adds details, CEO quotes, share reaction)

By Steven Scheer

JERUSALEM, May 29 (Reuters) - Israeli defence electronics firm Elbit Systems reported higher fourth-quarter net profit and said acquisitions and rising global defence spending is likely to ensure annual growth is better than last year.

The maker of drones, pilot helmet displays and cyber security systems said on Tuesday it earned $1.28 per diluted share excluding one-off items in January-March, up from $1.21 a year earlier.

Revenue rose to $818.5 million from $749.2 million.

Elbit’s order backlog jumped to $8.05 billion at the end of March, from $7.07 billion a year earlier, and with 74 percent of the backlog coming from outside Israel. Sixty percent of the backlog will be produced for customers during 2018 and 2019, it said.

“Many countries have already committed to spend more on defence and that creates a big opportunity,” CEO Bezhalel Machlis told Reuters, noting defence spending is on the rise in the United States, Europe and Asia-Pacific. “The company is growing and this trend will continue.”

Machlis said the company also hopes to soon complete its 1.8 billion shekel ($502 million) purchase of weapons maker IMI from the Israeli government, which would expand Elbit’s portfolio.

The Israeli government has said it expects to complete the sale of IMI by July 1, pending antitrust approval. The deal will likely make Elbit the country’s biggest defence contractor.

Last month Elbit also completed its purchase of U.S.-based Universal Avionics Systems for $120 million.

Machlis said he expects revenue from the Avionics deal to be reflected in second-quarter results as Elbit strengthens its position in the commercial aviation market.

“Acquisitions are part of our strategy and our balance sheet enables us to do it,” he said. “We look for technologies to enhance our portfolio and market positions.”

At the same time, Elbit is boosting spending on research and development, he said.

Elbit declared a dividend of 44 cents per share for the first quarter, unchanged from the fourth quarter.

Its shares are up 2.1 percent in late morning trading in Tel Aviv, although they are down 10 percent since the start of 2018. ($1 = 3.5846 shekels) (Reporting by Steven Scheer; Editing by Susan Fenton)

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