Elbit’s profit soars as global defense needs drive record order backlog

Defense firm reports growing sales of ammunition and munitions to Israel’s military and Europe; total orders top $30 billion at the end of March, with 71% tied to global customers

Israeli defense giant Elbit Systems saw its quarterly profit surge and order backlog grow to a record, as heightened geopolitical conflicts and increased military spending continued to bolster demand for its defense and weapons systems from the Israeli military and countries in Europe and Asia.

“Our funnel of orders has never been so strong,” said Elbit CEO Bezhalel (Butzi) Machlis announcing the company’s first quarter results on Tuesday. “We see growing potential in the US market and Europe, especially from Germany, Scandinavian countries, and the Baltics, as well as in the Gulf countries, and also in countries in the Far East around China.”

To meet growing demand and operational challenges, Elbit is investing in expanding production capacity and increasing the use of automation, robotics, and artificial intelligence, Machlis added.

The country’s largest privately owned defense firm generated a net profit in the January to March period of $161 million, up more than 50% from the $107 million posted in the same quarter a year ago. Revenue rose by almost 16% to a record $2.2 billion from $1.9 billion during the same comparative period, led by sales of its land systems, which were up 27% due largely to increased ammunition and munitions sales in Israel and Europe.

Elbit, led by Machlis, is an arms manufacturer and supplier specializing in the development of a broad spectrum of defense, homeland security and commercial systems that are marketed worldwide.

The defense firm’s Tel Aviv-listed shares jumped 8% on Tuesday and have soared 21% since the start of the year, buoyed by booming sales to Israel’s military and multiple contracts with international customers. Following the multifront wars sparked by the October 7, 2023, Hamas massacre with Hamas, Hezbollah, and subsequent Iran conflicts, alongside the war between Russia and Ukraine, Israel’s military and European countries have been increasing defense spending and showing growing interest in buying Israeli defense technology due to heightened regional security concerns.

As a result, Elbit’s backlog of orders for the first time crossed the $30 billion threshold, reaching a record $30.2 billion at the end of the first quarter, up more than $7 billion versus the same quarter last year. Most of the increase was attributable to orders from Israel and Asia‌. Overall, 71% of the total backlog was generated from orders outside of Israel, Elbit said.

Over the past two years, Elbit has been inking contracts with global customers even as pro-Palestinian and anti-Israel protesters have assailed the firm, negative sentiment toward Israel has been growing, and arms embargoes have been floated over Israel’s conduct during the war against the Hamas terror group in Gaza and hostilities with Iran.

Alongside the quarterly earnings, Elbit announced a $1.4 billion deal to supply a European country with a broad range of its advanced military modernization systems, intended to improve the nation’s operational maneuverability and survivability on the battlefield.

As part of the five-year defense contract, the unnamed European country will be equipped with Elbit’s autonomous unmanned vehicles and ground-based electronic warfare solutions, precision-guided munitions for artillery and air-to-ground strikes, electro-optical designation systems and reconnaissance systems – all connected through software-defined radio, or SDR.

These systems will “improve the nation’s operational effectiveness towards becoming an advanced and modern army,” Elbit said.

Listed on both the Tel Aviv and Nasdaq stock exchanges, the defense firm is controlled by Israeli billionaire Michael Federmann through Federmann Enterprises. It operates in various fields, including aerospace, land and naval command and control, communications, and intelligence, surveillance and reconnaissance systems. Elbit has a workforce of 24,000 employees, out of which 14,000 are based in Israel and 10,000 abroad.