Elbit Systems Ltd., Israel’s largest non-governmental defense company, reported its first quarterly loss in more than four years amid pricing pressure caused by falling defense budgets in developed markets.
“During the fourth quarter we were presented with some challenges which impacted on our margins and profitability,” Chief Executive Officer Joseph Ackerman said in a company statement to the Tel-Aviv Stock Exchange today.
Elbit said it had a fourth-quarter loss of $13 million, compared with a profit of $44 million a year ago and reported 2011 net income of $90 million, less than half the $184 million reported for the previous year. The last time the company posted a quarter loss was in the second-quarter of 2007.
In December, Elbit said it hadn’t been granted a renewal of export authorization to complete a military contract awarded by a foreign customer due to “political considerations.” Elbit didn’t name the customer involved. Israeli TV station Channel 2 reported in December that the contract was for a military surveillance system to Turkey.
Elbit said halting the program meant writing-off inventory and other costs and it is currently in talks with the Defense Ministry. “This was a very weak quarter even if we neutralize the effect of Turkey on the period,” said Tsahi Avraham, an analyst at Clal Finance Brokerage Ltd. “Elbit plans to cut costs during the next year to make up for low defense budgets in the Western world.”
Turkey’s ties with Israel have deteriorated since the killing of nine Turkish activists by Israeli commandos during a raid on a ship in a flotilla bound for Gaza Strip in 2010.
Israel yesterday issued a travel warning advising citizens not to visit Turkey in the coming days because terror groups may attack Israeli or Jewish targets.