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Report Date : |
01.10.2014 |
IDENTIFICATION DETAILS
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Name : |
ISRAEL AEROPSPACE INDUSTRIES LTD |
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Registered Office : |
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Country : |
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Financials (as on) : |
31.12.2013 |
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Date of Incorporation : |
27.02.1966 |
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Legal Form : |
Government-Owned Company |
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Line of Business : |
Subject is engaged in the development, manufacture,
overhaul, repair, maintenance, export and marketing of civilian and military
aircrafts, medium-sized jets and aerospace equipment, electronic and advanced
technology systems, weapon and armament systems, law enforcement, training
and simulation systems |
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No. of Employees : |
16,092 |
RATING & COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Status : |
Good |
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Payment Behaviour : |
No complaints |
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Litigation : |
Clear |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – June 1, 2014
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Country Name |
Previous Rating (31.03.2014) |
Current Rating (01.06.2014) |
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Israel |
A2 |
A2 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
ISRAEL - ECONOMIC OVERVIEW
Israel has a technologically advanced
market economy. Cut diamonds, high-technology equipment, and pharmaceuticals
are among the leading exports. Its major imports include crude oil, grains, raw
materials, and military equipment. Israel usually posts sizable trade deficits,
which are covered by tourism and other service exports, as well as significant
foreign investment inflows. Between 2004 and 2011, growth averaged nearly 5%
per year, led by exports. The global financial crisis of 2008-09 spurred a
brief recession in Israel, but the country entered the crisis with solid
fundamentals, following years of prudent fiscal policy and a resilient banking
sector. In 2010, Israel formally acceded to the OECD. Israel's economy also has
weathered the Arab Spring because strong trade ties outside the Middle East
have insulated the economy from spillover effects. The economy has recovered
better than most advanced, comparably sized economies, but slowing demand
domestically and internationally, and a strong shekel, have reduced forecasts
for the next decade to the 3% level. Natural gas fields discovered off Israel's
coast since 2009 have brightened Israel's energy security outlook. The Tamar
and Leviathan fields were some of the world's largest offshore natural gas
finds this past decade. The massive Leviathan field is not due to come online
until 2018, but production from Tamar provided a one percentage point boost to
Israel's GDP in 2013 and is expected to contribute 0.5% growth in 2014. In
mid-2011, public protests arose around income inequality and rising housing and
commodity prices. Israel's income inequality and poverty rates are among the
highest of OECD countries and there is a broad perception among the public that
a small number of "tycoons" have a cartel-like grip over the major
parts of the economy. The government formed committees to address some of the
grievances but has maintained that it will not engage in deficit spending to
satisfy populist demands. In May 2013 the Israeli government, in a politically
difficult process, passed an austerity budget to reign in the deficit and
restore confidence in the government's fiscal position. Over the long term,
Israel faces structural issues, including low labor participation rates for its
fastest growing social segments - the ultra-orthodox and Arab-Israeli
communities. Also, Israel's progressive, globally competitive, knowledge-based
technology sector employs only 9% of the workforce, with the rest employed in
manufacturing and services - sectors which face downward wage pressures from
global competition
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Source
: CIA |
IAI TAMAM DIVISION
(TAMAM is a Division in the company on which we report)
ISRAEL AEROPSPACE
INDUSTRIES LTD. (Correct Name)
(Known in short as IAI)
Telephone 972 3 935 31 11; 953 85 62; 953 34 35
Fax 972 3 935 42 67
E-mail: schami@iai.co.il
Ben Gurion International Airport
LOD 7010000 ISRAEL
A government-owned company, incorporated as per file No.
52-002719-4 on the 27.02.1966 (incorporation formation as a limited shares
company), taking over activities originally founded in
Originally registered under the name ISRAEL AIRCRAFT INDUSTRIES LTD., which changed to the present name on the 06.11.2006.
Bonds are traded on the Tel Aviv Stock Exchange since May 2007.
Note: Regarding the privatization process, see more in CHARACTER.
Authorized share capital NIS 2,600,000,001.00, divided into -
2,600,000,001 ordinary shares of NIS 1.00 each,
of which 2,559,514,386 shares amounting to NIS 2,559,514,386.00 were issued.
Subject is fully owned by the State of Israel, through the Ministry of Defense (Minister in charge Moshe Ya'alon).
1. Rafi Maor, Chairman,
2. Ms. Hava Shechter,
3. Ms. Ofra Friedman,
4. Ms. Orna Angel,
5. Ms. Hana Muriel Setteboun,
6. Amal Asad.
7. Ms. Dina Efrati,
8. Gabby Sarusi.
Joseph Weiss.
Engaged in the development, manufacture, overhaul, repair, maintenance, export and marketing of civilian and military aircrafts, medium-sized jets and aerospace equipment, electronic and advanced technology systems, weapon and armament systems, law enforcement, training and simulation systems, etc.
In 2013 some 73% of sales were to the military/ defense sectors (were 74% in 2011, 75% in 2010), the rest to the civilian sector.
73% of sales in 2013 were for export (76% in 2012).
Activities are through 5 operating Groups:
BEDEK Aviation Group: one-stop shop for commercial aircraft conversion into cargo airplanes (among customers: UPS), as well as maintenance services for aviation companies, and the Israeli Air Force.
Civilian Aircraft Group: develop, engineer and manufacture of mid-size business jets and perform works for major international OEMs, including aero structure assemblies and systems, etc. The Group has a strategic cooperation with GULFSTREAM of the USA, for the manufacturing of executive mid-size jets. Among main plant in the Group is the Ramta Div.
Military Aircraft Group: Operating in front of the
military clients in Israel and all over the world and include development,
manufacturing and providing of manned and unmanned Aerial Vehicles (UAV)
solutions. Also deal in the development
of avionic systems and data channels for the upgrading of combat aircrafts,
training aircrafts and helicopters, delivering maintenance and logistic
services for world air forces. Also manufacturing wires for aircrafts and
helicopters and operating as a main subcontractor in assemblies manufacturing.
This Group also upgrades military aircrafts and manufactures unique aviation parts, for instance for LOCKHEED MARTIN's F-16 aircraft. Among main clients is the Israeli Air Force.
Group includes the following Divisions: MLT Div., Magnet Div. and the Lahav Div.
Missile Systems and Aerospace Group: development, manufacturing and marketing of various sorts of missiles (including the "Arrow" Anti-Tactical Ballistic Missiles and the "Barak" naval anti-ballistic missiles system), as well as satellites, including communication satellites ("Amos" series) and observation satellites ("Ofeq" and "Eros").
Group includes the following Divisions: MLM Div., MBT Missiles Div., MBT Space Div., MBT Technologies Div. and TMM Div (Tamam Div).
Note: TMM Div. develops inertial guidance and electro-optic systems.
ELTA SYSTEMS LTD., subject's largest wholly-owned subsidiary, developers, manufacturers, exporters and marketers of defense electronic systems, specializing in radar systems, electronic warfare and communication, information systems, homeland security, etc.
Local suppliers (among many others): TEKTEAM, TILTAN SYSTEMS
ENGINEERING, ELBE LEADING TECHNOLOGICAL SOLUTIONS, GRAND ENTERPRISES, NEXTEC
TECHNOLOGIES, SHAFIR PROD
Operating from a large complex of plots and buildings in the Ben Gurion International Airport Compound (2,000,000 sq. meters, long-term lease from the State), Lod. Also operating from plants in the Industrial Zones Yehud (MBT & TMM Divs.), Beer Yaakov (MLM Div.), Beer Sheva (RAMTA Div.), Ashdod (ELTA), Golan Heights (Golan Inds.) and in Atarot. Total area used by subject is 3,500,000 sq. meters.
Subject also leases properties abroad.
Note: TMM is using P.O. Box 75 for its plant in Yehud, Tel: +972-3-5315005; Fax: +972-3-5315070.
There are 16,092 employees serving IAI Group as of end of 2013 (had 16,258 employees as of end of 2012). Also have additional local overseas employees via subsidiaries.
In January 2011 the Minister of Finance approved an IPO of subject in 2 stages. In May 2012 it was reported that it will be done through 3 stages. According to the privatization plan subject is valued at US$ 3 billion – US$ 3.5 billion.
In May 2007 subject published prospects offering its bonds for the public via the Tel Aviv Stock Exchange TASE), raising a sum of approximately NIS 1 billion.
In November 2009 subject raised NIS 450 million by issuing bonds via TASE.
In January 2013 subject raised NIS 1,200 million by issuing bonds via TASE.
In July 2014 subject raised NIS 463.3 million by issuing bonds via TASE.
Accrued orders as of 30.06.2014: US$ 9,747 million.
There is 1 charge for an unlimited amount registered in March 2013 on company’s assets in favor of Bank Hapoalim Ltd., as well as 1 charge for the amount of US$ 94,500,000 registered on company’s assets, in favor of Bank Leumi Le'Israel Ltd. (placed April 2012).
Consolidated B/S shows:
US$ (millions)
31.12.2013 30.06.2014
ASSETS
Current assets
Cash and equivalents 774 481
Short term financial assets 1,183 904
Customers 447 577
Accounts receivable for work-in-process, net 696 850
Other debtors and receivables 329 356
Inventory and work-in-process, net
553 588
4,012 3,756
Non-current assets
Fixed assets, net 672 696
Intangible assets, net 119 117
Other non-current assets
203 216
994 1,029
5,006 4,785
====== ======
LIABILITIES
Current liabilities 3,288 3,100
Non-current liabilities 696 646
Equity 1,022 1,039
5,006 4,785
====== ======
Consolidated
Statement of Income
Year ended 31.12
US$ (millions)
2011 2012 2013
Revenues, net 3,436 3,338 3,642
Gross profit 518 508 522
Operating income 133 79 84
Profit before tax 100 93 51
Net income 83 74 75
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Consolidated revenues for
the first 6 months of 2014 were US$ 1,918 million (9.9% increase compared to
parallel period of 2013), making a gross profit of US$ 262 million, an
operating profit of US$ 33 million, and a net profit of US$ 21 million.
IAI NORTH AMERICA INC., 100%, USA,
IAI ASIA PTE LTD., 100%, Singapore,
ELTA SYSTEMS LTD., 100%, whose subsidiaries include: DESARROLLO DE TECNOLOGIAS Y SISTEMAS LIMITADA (50.01%, Chile), GAL – EL (MMIC) PARTERSHIP (50%), DECOLINK WIRELESS LTD. (30%), ELBATECH LTD. (50%), OPTIGO SYSTEMS LTD. (50%), HBL ELTA AVIONICS SYSTEMS PVT. LTD. (26%, India), LARDOSA INVESTMENT B.V. (100%, Holland) SAFEX IMPORT AND EXPORT GMBH, 100%, Germany,
EAT - EUROPEAN ADVANCED TECHNOLOGIES S.A, 100%, Belgium,
MARDAN PTY LTD., 100%, Singapore, holds IAI DO BRASIL, 100% AND PSF CONVERSION, 49.9%, Cyprus,
NOAMAR AIR HANDLING HOLDCO N.V, 40%, Holland,
IMAGE SAT INTERNATIONAL N.V. (ISI), 46.4%, Dutch Antilles,
BECONTREE HUNGARY KFT, 50%, Hungary,
AVIATION
ASTRA JET, 100%, USA,
EMPIRE AERO CENTER INC., 100%, USA,
STARK AEROSPACE INC., 100%, USA,
ISRAEL AIRCRAFT SERVICES INC, 100%, USA,
BIFC MANAGEMENT LTD., 50%, Cyprus,
PSF CONVERSIONS LLP, 50%, Cyprus,
ISRAELI UAV PARTNERSHIP, 50%,
TILTAN SYSTEMS ENGINEERING LTD., 35%,
BELGIUM ADVANCED TECHNOLOGIES S.A., 100%, Belgium.
G-NIUS UNMANNED GROUND SYSTEMS (UGS) LTD., 50%,
ISI CURAÇAO IN THE DUTCH ANTILLES, 46%, Dutch Antilles.
Bank Hapoalim Ltd., Business Central Branch (No. 600), Tel Aviv.
Bank Leumi Le’Israel Ltd., Tel Aviv Central Branch (No. 800), Tel Aviv.
Israel Discount Bank Ltd., Tel Aviv Main Branch (No. 010), Tel Aviv.
Also working with other local branches of the above banks.
In December 2007,
subject reported that American company AVIATION TECHNOLOGY GROUP INC (ATG), in
which subject also holds 12.2%, encountered financial difficulties. Subject has
agreements with ATG, including developing for ATG training jets, and its
investments may be written-off.
Apart from the above
(and few other relatively insignificant matters), nothing unfavorable learned.
In May 2012 it was reported on the renewal in process of subject's privatization, now to be handled in 3 stages, in which the first stage will include an IPO of some 30%, and then additional 2 share offerings. The State is estimated to hold some 30% of subject in the end. This plan is under the restriction of any shareholder to hold more than 5% and no controlling body.
In 2001 subject sold its 50% subsidiary GALAXY AEROSPACE LTD., manufacturers of executive jets “Galaxy”, to GENERAL DYNAMICS (GD) subsidiary GULFSTREAM, in consideration of US$ 365 million and further US$ 315 million, according to GALAXY performance till 2006. The cooperation between subject and GULFSTREAM intensified and by 2008 subject delivered 200 executive airplanes (G-200) in total value of US$ 4 billion.
In October 2008
subject announce a joint development with GULFSTREAM of a new executive jet
with advanced capabilities.
In 2002, subsidiary ELTA acquired from KOOR INDUSTRIES 30% of ELISRA ELECTRONIC SYSTEMS LTD. based on company value of US$ 330 million.
In March 2011 ELTA sold its shares (30%) in ELISRA to ELBIT SYSTEM for US$ 67.5 million.
Major deals reported in 2005: won a US$ 500 million tender to provide aviation parts to BOEING. Also, together with ELBIT SYSTEMS, won a US$ 183 million contract with the Turkish army.
Main contracts during 2006 were with the R&D agency of the Indian Ministry of Defense (D.R.D.D.) for the development of naval missile "Barak 8", in volume of over US$ 300 million. Other contracts were the supply UAV's to India (US$ 250 million) and to Australia (US$ 45 million.
In January 2007 subject (operates via its BEDEK Div.) and Japanese MITSU & CO. established M&B CONVERSIONS LTD. joint venture, for converting Boeing passenger airplanes type 767-300 into cargo airplane.
In July 2007 subject signed a long term cooperation agreement with German RHEINMETAL, for the development of advanced intelligence combat systems.
In May 2008, subject signed of an agreement with Indian TATA Concern for cooperation, designed to develop and manufacture defense and aviation equipment and systems. A joint new company was established called TASL, subject’s share 26%, and subject’s Board approved initial investment of up to US$ 50 million. TASL would be the platform for vast operation with Indian government. In late 2010 it was reported that TATA also entered with subject (via subsidiary ELTA) in another joint venture for radar manufacturing.
Indeed, in March 2009 subject announced a huge deal with the Indian Army in value of US$ 1.4 billion, where subject will develop ground and naval defensive missile systems.
There were reports on other major deals with the Indian government worth over US$ 2 billion, including intelligence aircrafts, missiles, UAVs and radar systems.
In June 2008, subject
signed an agreement with SYNERGY GROUP CORP., a leading corporate in South
America in the aviation, energy and shipyard fields, to establish a joint
company, which will develop a wide range of products in the security and
aviation areas, as well as supply services for commercial airlines.
Among deals reported
in recent years:
An overall service agreement with local Ministry of Defense,
for period of 9.5 years, designed to serve the Air Force heavy transportation
aircrafts, a deal volume may reach US$ 170 million; A US$ 100 million 10 years contract for upgrade and maintenance for KENYA
AIRWAYS jet engines (by BEDEK Div.); Aircraft conversion into cargo
airplanes for AIR TRANSPORT SERVICE GROUP subsidiary CARGO in volume of US$ 100
million; Upgrade F16 jets for foreign
armies (Morocco, Poland & Romania) in value of US$ 100 million; In the
framework of subject’s cooperation with Japanese MITSUI, initial US$ 15 million
supply contract signed; Subsidiary ELTA won jointly with ELBIT SYSTEMS EL-OP a
US$ 141 million contract (of which US$ 54 million for ELTA) to supply combined
airborne imagery intelligence systems to the Turkish Air Force; Sale of
fuelling jets to Colombian Army for US$ 60 million.
In May 2010 subject sold EUROCOM Group all its shares (20.5%) in SPACE COMMUNICATION LTD. (SPACECOM), marketers of satellite services from the Israeli Satellite “Amos” (developed and manufactured by subject), for NIS 167.325 million. In June 2012 SPACECOM announced decided to acquire "Amos 6" satellite from subject, expected to be launched in 2015 1stQ (and remain in space at least 16 years), in a deal volume valued at US$ 195 million. Subject's "Amos 4" satellite for SPACECOM was launched from base in Kazakhstan in September 2013 and is now being tested, after which it will be delivered to SPACECOM.
In summer 2010 it was reported that subsidiary ELTA will sell radar systems to clients in Asia in total volume of US$ 33 million, air defense radars to a client in Asia for US$ 57 million and communication systems to foreign clients in volume of US$ 55 million. Another major deal was reported with India in estimated value of US$ 500 million (part of the transactions in India mentioned above).
In recent years
subject signed and delivered several major contracts for supply of UAVs to
foreign armies. In 2008 it had a contract jointly with Canadian partner MDA for
supply of UAVs to Canadian Army in value of US$ 80 million (with potential for
extension); In mid 2010 subject signed a continuous deal with the Australian
Army in volume if tens of US$ millions (also with MDA). Other deals: sale of
UAVs systems to the Russian company OPK OBORNPROM in volume of US$ 400 million
(in 3 years). A report in mid 2010 mentioned a coming deal to supply Brazilian
forces with 12 UAVs (Brazilian Police already acquired couple of UAVs in the
past), designed towards the 2014 World Cup games and 2016 Olympic Games in the
country, in a deal which could reach US$ 400 million.
During 2011, subject has entered the 'Ground Warfare" Sector, as part of a reorganization to compensate for the losses of the Civilian Aircraft sector. Also, in June 2011 subject reported it will develop, construct and erect 2 wind turbine power stations (together with a foreign company), producing 3mW each, with an investment of € 43 million.
In June 2011 it was reported that subject and AIRBUS MILITARY will develop an aircraft for intelligence, detection and areal control.
In January 2012 subject announced on its largest ever deal (in 2 stages, to be spread over 4 years) to supply systems and equipment to an Asian client in total volume of US$ 1.6 billion.
In February 2012 it was reported that subsidiary ELTA will supply advanced radar systems to an Asian country for US$ 150 million.
In March 2012 it was reported ELTA won 3 contracts in total volume of US$ 76 million for supply of radar systems and satellite communications systems.
In July 2012 it was reported that subject sees a good forecast for its newly developed civil aircraft towing system developed with AIRBUS and LUFTHANSA.
In September 2012 it was reported that subject, together with ELBIT SYSTEMS, will supply the Israeli Ministry of Defense services for the new training aircrafts in volume of US$ 603 million (subject's share US$ 183 million).
In March 2013 subject reported on a large contract to convert Boeing civilian aircrafts into military uses. The value of the contract was not published, though estimated to be US$ 250 – US$ 400 million.
In April 2013 a cooperation contract was signed between subject and LOKHEED MARTIN for the manufacturing plan of Stealth Bomber F-35, where subject will manufacture wings to the future jet. Subject estimates the potential of the future contract at US$ 2.5 billion for the next 10-15 years.
In July 2014 subject reported that it is in advanced negotiations to supply electronics systems to a foreign army in volume of US$ 1.2 billion in a 5 years' contract.
Also in July 2014 it was reported that subject is entering a tender to supply 4 fueling aircrafts to South Korea in volume of US$ 1.4 billion.
In the prestigious American “Defense News” magazine 100 leading defense industry corporations in the world published and July 2013 subject was ranked 39th, of the defense industry companies.
Israel is considered one of the largest exporters of military and defense equipment in the world. Asia is the largest geographical market for Israeli export, while the U.S.A. is the largest country market for the military and defense industries' export.
Export level fell significantly in 2011 due to the unfavorable global economic circumstances, however climbed back by 20% in 2012 to US$ 7.4 billion.
Sales by the 4 largest local defense industries (subject, ELBIT, RAFAEL and IMI) comprise some 85% of overall sales.
Good for trade engagements and all credits.
FOREIGN EXCHANGE RATES
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Currency |
Unit
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Indian Rupees |
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US Dollar |
1 |
Rs.61.61 |
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1 |
Rs.100.28 |
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Euro |
1 |
Rs.78.21 |
INFORMATION DETAILS
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Analysis Done by
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DIV |
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Report Prepared
by : |
NIS |
RATING EXPLANATIONS
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
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56-70 |
A |
Financial & operational base are regarded healthy. General unfavourable
factors will not cause fatal effect. Satisfactory capability for payment of
interest and principal sums |
Fairly Large |
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41-55 |
Ba |
Overall
operation is considered normal. Capable to meet normal commitments. |
Satisfactory |
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26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
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11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
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-- |
NB |
New Business |
-- |
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This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.