Rafael CFO David Vaish said that the global economic crisis had no effect on the company's results last year because it takes time for governments to adjust their defense procurements for equipment and services to a given economic situation. He predicts that the economic crisis, which erupted in 2008, will have no effect on the company before 2010.
Vaish said, "Our concerns about adjustments in defense budgets will be reflected in fewer procurements in 2010." In other words, he predicts that Rafael will report good results in 2009.
As for the first quarter of 2009, Vaish added, "As far as the current quarter is concerned, we do not even see a drop in orders. The pace is the same as in 2008."
Rafael has 6,000 employees as well as subcontractors. The company develops munitions, armaments, and weapons platforms for the IDF and international customers.
"We're entering the era of crisis with a strong business position that gives us a security cushion. This is the case not only for our orders backlog, but also for our excellent cash flow, and our very good products portfolio. We believe that even in times like these, we'll be able to find customers," Vaish:
"Nonetheless, in recognition that there is risk, we're undertaking cost-saving measures, especially in procurements, because we usually make large-scale procurements. We're benefiting from lower prices for raw materials, but that's a very limited part of our procurements activity. We'll concentrate our cost-saving on procurements from subcontractors of components and sub-components."
"We're not laying off staff or cutting salaries. We even intend to increase our work force in 2009 in order to meet our large orders backlog. Rafael is an island of stability from that standpoint."
Rafael Advanced Defense Systems Ltd. published its full-year results for 2008. The company achieved a record net profit of $46 million, up 39% on 2007, on revenue of $1.53 billion. Orders received during the year reached $2.5 billion, up 98% on a year earlier.