|
Report Date : |
02.10.2014 |
IDENTIFICATION DETAILS
|
Correct Name : |
ISRAEL AEROPSPACE INDUSTRIES LTD. |
|
|
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Registered Office : |
LOD 7010000 |
|
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Country : |
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Financials (as on) : |
30.06.2014 |
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Date of Incorporation : |
27.02.1966 |
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Legal Form : |
Limited Shares Company |
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Line of Business : |
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 |
|
|
|
|
No. of Employees : |
16,092 |
RATING & COMMENTS
|
MIRA’s Rating : |
Ba |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
Status : |
Satisfactory |
|
Payment Behaviour : |
No complaints |
|
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
|
Country Name |
Previous Rating (31.03.2014) |
Current Rating (01.06.2014) |
|
Israel |
A2 |
A2 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
|
Restricted |
C2 |
|
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
|
Source
: CIA |
ISRAEL AEROPSPACE
INDUSTRIES LTD.
IAI TAMAM DIVISION
(TAMAM is a Division in the company on which we report)
Correct Name:
ISRAEL AEROPSPACE
INDUSTRIES LTD.
(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.
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
====== ======
REVENUES
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
====== ====== ======
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
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.61.75 |
|
|
1 |
Rs.100.06 |
|
Euro |
1 |
Rs.77.95 |
INFORMATION DETAILS
|
Analysis Done by
: |
RAS |
|
|
|
|
Report Prepared
by : |
PDT |
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
|
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 |
|
|
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 |
|
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
|
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 |
|
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
|
-- |
NB |
New Business |
-- |
|
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.