The company attributed its low profitability in the first quarter to a temporary decline in passenger aircraft conversions to cargo.
Israel Aerospace Industries (IAI) published its first quarter financials today. The company posted a profit of $14 million for the quarter, on sales of $1 billion. Although sales grew 13.5% in comparison with the first quarter of 2018, net profit was unchanged.
IAI explained the growth in sales by the performance of its Elta Systems unit, and higher sales by the Systems Missiles and Space group.
IAI's gross profit in the first quarter was $122 million, 15% less than in the corresponding quarter of 2018, when gross profit was $144 million.
IAI explained the decline in gross profit by lower profitability in the Aviation group, following a decline in conversions of passenger aircraft to cargo. IAI says the decline is temporary, and is due to delay in arrival of aircraft for conversion, among other things because of the long shutdown of US government agencies that included the Federal Aviation Administration.
Earlier this year, IAI consolidated its civilian divisions, which had been making losses for years, into a single division. Under agreements with its workers committee, 200 of the civilian division's employees will retire, be laid off, or be moved to other divisions.
IAI's salary expense rose by $26 million in the first quarter in comparison with the corresponding quarter last year. The rise is due to a rise in pay in shekel terms and a fall in the effective dollar exchange rate.
Commenting on the results, IAI CEO Nimrod Sheffer said today, "In the first quarter of the year the company increased its sales revenue and reached an orders backlog of $13.7 billion. We expect growth in annual revenue."