(Adds CEO comments, details, share reaction)
By Tova Cohen
TEL AVIV May 16 Israeli defence electronics
firm Elbit Systems reported slightly higher quarterly
net profit, boosted by a rise in revenue that was partly offset
by increased research and marketing spending aimed at boosting
future revenue growth.
Elbit, Israel's largest publicly traded defence
firm, said on Tuesday it earned $1.21 per diluted share
excluding one-time items in the first quarter, up from $1.20 a
The maker of drones, pilot helmet displays and cyber
security systems said revenue grew to $749.2 million from $721.2
"In today's geopolitical environment, we are seeing a trend
of larger defence spending in many of our target markets,
especially in the electronic defence sphere," Chief Executive
Bezhalel Machlis said.
Tensions in the South China Sea, Russia's intervention in
Syria and policies being pushed by U.S. President Donald Trump
have been a boon for the defence sector, Machlis said.
Elbit increased its R&D and marketing spending to capitalise
on these growing opportunities, he told Reuters, adding the
company had now reached an "appropriate" level for such
For the rest of the year, he said, "we expect to see
continued growth in earnings, more than in the first quarter.
The trend is clear."
Research and development spending rose to $58.4 million in
the first quarter from $56 million. Marketing expenses rose 8
percent while financial expenses increased to $8.6 million from
$1.7 million as the year-earlier quarter benefited from a gain
from exchange rate differences.
In the United States, Elbit works with the Department of
Defense and the Department of Homeland Security.
Elbit has a contract for its border surveillance technology
to electronically secure the U.S.-Mexican border in Arizona
"I believe it will be expanded" both within Arizona as well
as to other states, Machlis said.
The only geographic region suffering right now is Latin
America, he noted.
Elbit's order backlog rose to $7.07 billion at the end of
March from $6.78 billion a year earlier.
Elbit declared a dividend of 44 cents per share, unchanged
from the fourth quarter.
Shares of Elbit's Tel Aviv-listed shares were down 1.25
percent at midday.
(Editing by Steven Scheer and Mark Potter)