Israel Defense Spending Market Profile

MarketLine Industry Profile

Defense Spending in
Israel
August 2013
Reference Code: 0188-2405

Publication Date: August 2013

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Israel - Defense Spending
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EXECUTIVE SUMMARY
Market value
The Israeli defense spending market grew by 4.1% in 2012 to reach a value of $14.7 billion.

Market value forecast
In 2017, the Israeli defense spending market is forecast to have a value of $15.4 billio n, an increase of 5.2% since 2012.

Market volume
The Israeli defense spending market remained at a volume of 184.6 thousand personnel in 2012.

Market volume forecast
In 2017, the Israeli defense spending market is forecast to have a volume of 187.9 thousan d personnel, an increase of
1.8% since 2012.

Category segmentation
Equipment is the largest segment of the defense spending market in Israel, accounting for 52.4% of the market's total
value.

Geography segmentation
Israel accounts for 16% of the MEA defense spending market value.

Market rivalry
Main players within the global market for defense products and systems are large companies with well -established
reputations. Such companies are diversified in terms of the products they manufacture and their geograp hical presence;
however, they often have similar business models to their competitors which can increase rivalry.


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TABLE OF CONTENTS
Executive Summary..........................................................................................................................................................................2
Market value ..................................................................................................................................................................................2
Market value forecast...................................................................................................................................................................2
Market volume...............................................................................................................................................................................2
Market volume forecast ...............................................................................................................................................................2
Category segmentation................................................................................................................................................................2
Geography segmentation ............................................................................................................................................................2
Market ri valry .................................................................................................................................................................................2
Market Overview ...............................................................................................................................................................................7
Market definition............................................................................................................................................................................7
Market analysis .............................................................................................................................................................................7
Market Data........................................................................................................................................................................................8
Market value ..................................................................................................................................................................................8
Market volume...............................................................................................................................................................................9
Market Segmentation .....................................................................................................................................................................10
Category segmentation..............................................................................................................................................................10
Geography segmentation ..........................................................................................................................................................11
Market Outlook ................................................................................................................................................................................12
Market value forecast.................................................................................................................................................................12
Market volume forecast .............................................................................................................................................................13
Five Forces Analysis ......................................................................................................................................................................14
Summary......................................................................................................................................................................................14
Buyer power.................................................................................................................................................................................15
Supplier power ............................................................................................................................................................................16
New entrants ...............................................................................................................................................................................17
Threat of substitutes...................................................................................................................................................................18
Degree of rivalry..........................................................................................................................................................................19
Leading Companies........................................................................................................................................................................20


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Elbit Systems Ltd........................................................................................................................................................................20
ELTA Systems Ltd......................................................................................................................................................................24
Israeli Military Industries Ltd. ....................................................................................................................................................25
Lockheed Martin Corporation ...................................................................................................................................................26
Macroeconomic Indicators.............................................................................................................................................................29
Country Data ...............................................................................................................................................................................29
Appendix...........................................................................................................................................................................................31
Methodology................................................................................................................................................................................31
Industry associations..................................................................................................................................................................32
Related MarketLine research....................................................................................................................................................32


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LIST OF TABLES
Table 1: Israel defense spending market value: $ billion, 2008 –12..........................................................................................8
Table 2: Israel defense spending market volume: thousand personnel, 2008–12.................................................................9
Table 3: Israel defense spending market category segmentation: $ billion, 2012 ...............................................................10
Table 4: Israel defense spending market geography segmentation: $ billion, 2012 ............................................................11
Table 5: Israel defense spending market value forecast: $ billion, 2012 –17 ........................................................................12
Table 6: Israel defense spending market volume forecast: thousand personnel, 2012 –17 ...............................................13
Table 7: Elbit Systems Ltd.: key facts ..........................................................................................................................................20
Table 8: Elbit Systems Ltd.: key financials ($) ...........................................................................................................................22
Table 9: Elbit Systems Ltd.: key financial ratios.........................................................................................................................22
Table 10: ELTA Systems Ltd.: key facts .....................................................................................................................................24
Table 11: Israeli Military Industries Ltd.: key facts .....................................................................................................................25
Table 12: Lockheed Martin Corporation: key facts ....................................................................................................................26
Table 13: Lockheed Martin Corporation: key financials ($)......................................................................................................27
Table 14: Lockheed Martin Corporation: key financial ratios...................................................................................................27
Table 15: Israel size of population (million), 2008–12...............................................................................................................29
Table 16: Israel gdp (constant 2000 prices, $ billion), 2008 –12..............................................................................................29
Table 17: Israel gdp (current prices, $ billion), 2008–12 ..........................................................................................................29
Table 18: Israel inflation, 2008–12...............................................................................................................................................30
Table 19: Israel consumer price index (absolute), 2008–12 ....................................................................................................30
Table 20: Israel exchange rate, 2008–11 ...................................................................................................................................30


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LIST OF FIGURES
Figure 1: Israel defense spending market value: $ billion, 2008 –12 ........................................................................................8
Figure 2: Israel defense spending market volume: thousand personnel, 2008–12 ...............................................................9
Figure 3: Israel defense spending market category segmentation: % share, by value, 2012 ............................................10
Figure 4: Israel defense spending market geography segmentation: % share, by value, 2012 ........................................11
Figure 5: Israel defense spending market value forecast: $ billion, 2012 –17.......................................................................12
Figure 6: Israel defense spending market volume forecast: thousand personnel, 2012–17..............................................13
Figure 7: Forces driving competition in the defense spending market in Israel, 2012.........................................................14
Figure 8: Drivers of buyer power in the defense spending market in Israel, 2012 ...............................................................15
Figure 9: Drivers of supplier power in the defense spending market in Israel, 2012 ...........................................................16
Figure 10: Factors influencing the likelihood of new entrants in the defense spending market in Israel, 2012 ..............17
Figure 11: Factors influencing the threat of substitutes in the defense spending market in Israel, 2012.........................18
Figure 12: Drivers of degree of rivalry in the defense spending market in Israel, 2012 ......................................................19
Figure 13: Elbit Systems Ltd.: revenues & profitability .............................................................................................................22
Figure 14: Elbit Systems Ltd.: assets & liabilities ......................................................................................................................23
Figure 15: Lockheed Martin Corporation: revenues & profitability ..........................................................................................28
Figure 16: Lockheed Martin Corporation: assets & liabilities...................................................................................................28


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MARKET OVERVIEW
Market definition
Defense spending covers capital items, military personnel, government defense agencies, and related expenditure on
defense and peacekeeping. The defense market is segmented to include expenditure on: personnel; equipment;
infrastructure; and other expenditure (which represents all other spending). Volume is measured as the active serving
personnel in the national army, air force, navy (including marines and coast guard) and other elements of the service,
such as Joint Staff. An y currency conversions used in the creation of this report have been calculated using constant
2012 annual average exchange rates.
For the purposes of this report, the Middle East-Africa (MEA) region comprises Egypt, Israel, Nigeria, Saudi Arabia,
South Africa, and United Arab Emirates.

Market analysis
In real terms, Israeli defense spending saw low growth during 2008 -2012, although as a percentage of GDP, spending
decreased year-on-year during the same period. Data suggests defense spending will fall into de cline until 2014, where
the government has pledged to increase its defense budget for the next four years to record levels in 2018.
Israeli defense spending had a total budget allocation of $14.7bn in 2012, representing a compound annual growth rate
(CAGR) of 2.4% between 2008 and 2012. In comparison, the Nigerian and Egyptian markets grew with CAGRs of 17.4%
and 6.6% respectively, o ver the same period, to reach respective values of $2.3bn and $4.4bn in 2012.
Personnel numbers declined with a compound annual rate of change (CARC) of -0.1% between 2008 and 2012, to reach
a total of 184,550 personnel in 2012. The number of personnel is expected to rise to 187,926 personnel by the end of
2017, representing a CAGR of 0.4% for the 2012-2017 period.
The equipment segment was the market's most lucrative in 2012, with a total budget allocation of $7.7bn, equivalent to
52.4% of the market's overall value. The personnel segment had a budget allocation of $6.0bn in 2012, equating to
41.0% of the market's aggregate value.
The performance of the market is forecast to decelerate, with an anticipated CAGR of 1.0% for the five -year period 2012
- 2017, which is expected to drive the market to a value of $15.4bn by the end of 2017. Comparatively, the Nigerian and
Egyptian markets will grow with CAGRs of 11.0% and 7.2% respectively, o ver the same period, to reach respective
values of $3.9bn and $6.2bn in 2017.


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MARKET DATA
Market value
The Israeli defense spending market grew by 4.1% in 2012 to reach a value of $14.7 billion.
The compound annual growth rate of the market in the period 2008–12 was 2.4%.

Table 1: Israel defense spending market value: $ billion, 2008–12
Year

billion

2008

13.4

2009

13.9

4.2%

2010

13.8

(0.8%)

2011

14.1

1.9%

2012

14.7

4.1%

CAGR: 2008–12
SOURCE: MARKETLINE

% Growth

2.4%
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Figure 1: Israel defense spending market value: $ billion, 2008–12

SOURCE: MARKETLINE


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Market volume
The Israeli defense spending market remained at a volume of 184.6 thousand personnel in 2012.
The compound annual rate of change of the market in the period 2008 –12 was -0.1%.

Table 2: Israel defense spending market volume: thousand personnel, 2008–12
Year

thousand personnel

2008

185.0

2009

184.6

(0.2%)

2010

184.6

0%

2011

184.6

0%

2012

184.6

0%

CAGR: 2008–12
SOURCE: MARKETLINE

% Growth

(0.1%)
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Figure 2: Israel defense spending market volume: thousand per sonnel, 2008–12

SOURCE: MARKETLINE


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MARKET SEGMENTATION
Category segmentation
Equipment is the largest segment of the defense spending market in Israel, accounting for 52.4% of the market's total
value.
The Personnel segment accounts for a further 41% of the market.

Table 3: Israel defense spending market category segmentation: $ billion, 2012
Category

2012

%

Equipment

7.7

52.4%

Personnel

6.0

41.0%

Infrastructure

0.3

1.8%

Other

0.7

4.8%

Total

14.7

100%

SOURCE: MARKETLINE

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Figure 3: Israel defense spending market category segmentation: % share, by value, 2012

SOURCE: MARKETLINE


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Geography segmentation
Israel accounts for 16% of the MEA defense spending market value.
Saudi Arabia accounts for a further 61.8% of the MEA market.

Table 4: Israel defense spending market geography segmentation: $ billion, 2012
Geography

2012

%

Saudi Arabia

218.7

61.8

Israel

56.5

16.0

United Arab Emirates

35.9

10.1

South Africa

17.2

4.9

Egypt

16.8

4.8

Nigeria

8.9

2.5

Total

354

100%

SOURCE: MARKETLINE

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Figure 4: Israel defense spending market geography segmentation: % share, by value, 2012

SOURCE: MARKETLINE


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MARKET OUTLOOK
Market value forecast
In 2017, the Israeli defense spending market is forecast to have a value of $15.4 billion, an increase of 5.2% since 2012.
The compound annual growth rate of the market in the period 2012–17 is predicted to be 1%.

Table 5: Israel defense spending market value forecast: $ billion, 2012–17
Year

billion

% Growth

2012

14.7

4.1%

2013

14.3

(2.8%)

2014

13.8

(3.2%)

2015

14.3

3.9%

2016

14.9

3.8%

2017

15.4

3.6%

CAGR: 2012–17
SOURCE: MARKETLINE

1.0%
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Figure 5: Israel defense spending market value forecast: $ billion, 2012–17

SOURCE: MARKETLINE


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Market volume forecast
In 2017, the Israeli defense spending market is forecast to have a volume of 187.9 thousand personnel, an increase of
1.8% since 2012.
The compound annual growth rate of the market in the period 2012–17 is predicted to be 0.4%.

Table 6: Israel defense spending market volume forecast: thousand personnel, 2012 –17
Year

thousand personnel

% Growth

2012

184.6

0%

2013

184.6

0%

2014

184.6

0%

2015

187.7

1.7%

2016

187.9

0.1%

2017

187.9

0.0%

CAGR: 2012–17
SOURCE: MARKETLINE

0.4%
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Figure 6: Israel defense spending market volume forecast: thousand personnel, 2012 –17

SOURCE: MARKETLINE


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FIVE FORCES ANALYSIS
The defense spending market will be analyzed taking manufacturers of weapons and defense systems, and national
defense departments as players. The key buyers will be taken as national governments, and raw materials and parts
manufacturers, and individual personnel as the key suppliers.

Summary
Figure 7: Force s driving competition in the defense spending market in Israel, 2012

SOURCE: MARKETLINE

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Main players within the global market for defense products and systems are large companies with well -established
reputations. Such companies are diversified in terms of the products they manufacture and their geographical presence;
however, they often have similar business models to their competitors which can increase rivalry.
The defense spending market is unique in that its principal buyers are also the market players. The main market players,
and the ones this profile focuses on, are manufacturers of weapons and defense systems. However, national defense
departments are also players as they provide the necessary training of military personnel. A nation's government is the
main buyer, purchasing weapons and defense systems from the players, but also providing its defense department with
the funds to pay for recruit's training and wages. Suppliers are more conventional, in that they are the raw material and
parts manufacturers, and the individual personnel who are either enlisted or volunteer for military service.
The only legitimate buyers for military hardware are the governments of sovereign states. This means that the defens e
market in most countries is a monopsony, which immediately gives great power to the buyer. Defense companies make
use of raw materials such as aluminum, titanium and composites, and also components provided by sub -contractors,
relying on high quality materials, thus increasing the power suppliers wield over players. Anyone willing to start a defense
products and systems manufacturing company may find it extremely problematic as generally, in order to compete with
incumbents, new players need large-scale entry and an integrated business model.
There are few substitutes to the purchase of new defense systems and weapons, although one of them is the purchase
of used military equipment, usually reserved for smaller nations or developing countries with limited defense budgets. In
the last few years there has also been an outsourcing of defense operations to private companies, such as Academi and
Aegis, to operations in Iraq and Afghanistan.


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Buyer power
Figure 8: Drivers of buyer power in the defense spending market in Israel, 2012

SOURCE: MARKETLINE

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The only legitimate buyers for military hardware are the governments of sovereign states. This means that the defense
market in most countries is a monopsony, which, combined with a buyer's large size and significant financial muscle,
immediately gives great power to the buyer. Defense companies can ease the impact of buyer power by selling to
several countries, although this will normally require their own governments to grant export licenses.
In major defense projects, buyers set out their requirements and specifications, which market players must meet. This
means that the products they buy are highly differentiated. Buyer switching costs are also potentially high. These factors
would tend to weaken buyers. However, buyers can backwards integrate (for example a number of countries have state
controlled defense companies, and the US operates governmental departments such as the Defense Advanced
Research Projects Agency also known as DARPA) which strengthens their position.
With defense spending, the situation is more complex than in a typical consumer market. Boeing, for example, reports
that its key defense customer, the US Department of Defense, may terminate a supply c ontract either ‘for its own
convenience’ or ‘for default’. In the first case, a company would be entitled to payment for work completed to date, plus
cancellation costs. In the second case, where the company was judged not to have met project specifications, it would
receive payment for work accepted, and might find itself liable for some of the cost of re -procurement as well.
No state is likely to cease spending on defense altogether, as a defense force is seen as vital for national security. The
necessity of maintaining a military weakens buyer power. However, governments may also be under pressure to balance
defense with other areas of public spending. Furthermore political decisions to reduce public spending and the decline in
tax revenue, a by-product of the global 'financial crisis', has resulted in many governments reconsidering how much they
spend on particular defense projects, with defense spending often seen as a more politically safe area to implement
spending cuts.
On balance, buyer power is moderate.


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Supplier power
Figure 9: Drivers of supplier power in the defense spending market in Israel, 2012

SOURCE: MARKETLINE

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Defense companies make use of raw materials such as aluminum, titanium and composites, and also components
provided by sub-contractors. High quality inputs are very important in this market. There may be no alternative suppliers
for some of them. Even where multiple suppliers are available, it can take up to one year to certify that thei r products are
of a specified quality. This increases switching costs and boosts supplier power.
Depending on their position within the military, individual personnel can be expensive to replace in terms of the money
invested by a country's defense department in their training, as a result these high switching costs increase supplier
power.
However, due to the unique nature of the job role, the chances of individual personnel forward integrating are unlikely,
with the only instances of this occurring are if they hire themselves out as mercenaries or work for private defense
contractors, which serves to weaken the supplier position. Equally it is impossible for market players to backward
integrate in terms of individual personnel, thus boosting supplier pow er.
Other factors impacting on individual personnel are the small size and high numbers of this type of supplier which
decreases the strength of suppliers. Due to the importance of personnel in the military, and the lack of viable
alternatives, which may change in the future as the development of unmanned drones continues, alongside the
importance of high quality recruits in both a mental and physical capacity, supplier power is increased.
Overall, supplier power is assessed as strong.


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New entrants
Figure 10: Factors influencing the likelihood of new entrants in the defense spending market in
Israel, 2012

SOURCE: MARKETLINE

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An yone willing to start a defense products and systems manufacturing company may fin d it extremely problematic. In
order to compete with incumbents, new players generally need large -scale entry and an integrated business model;
however, it is possible to exploit a niche such as a computer software program or a solution to a very particula r
environment. The typical business model also requires large amounts of capital outlay in terms of materials needed,
storage facilities and transportation etc. Expertise and knowledge is crucial to the success of companies as the work is
highly specialized with high levels of intellectual property.
Defense operations are subject to numerous domestic and international laws, regulations and restrictions (including
import-export controls, money-laundering, false accounting, anti-bribery and anti-boycott provisions). Non-compliance
with these laws, regulations and restrictions could expose the company to fines, penalties, suspension or the termination
of contracts. The regulation level varies from country to country. Western markets in particular operate stric t controls
which new entrants must be aware of. These factors all serve to make the defense spending market difficult for new
entrants.
Furthermore, increasing fears about global warming are leading to a focus on reducing emissions with many firms having
to re-design and adjust the way they manufacture products. Successful entry into this market is most likely achieved
through an existing company with similar properties (e.g. engineering) that has diversified into the market. Gaining entry
to a new geographic market can also be difficult and generally requires some kind of physical presence, and is often
facilitated by mergers, acquisitions and partnerships.
Israeli defense spending is forecast to experience marginal growth, making market conditions unfavora ble for potential
new entrants.
Overall the threat of new entrants is weak.


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Threat of substitutes
Figure 11: Factors influencing the threat of substitute s in the defense spending market in I srael,
2012

SOURCE: MARKETLINE

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There are few substitutes to the purchase of new defense systems and weapons, although one of them is the purchase
of used military equipment. This segment of the market is usually solely reserved for smaller nations or developing
countries with limited defense budgets, and as such is of little threat as a substitute. However, in the last few years there
has been an outsourcing of defense operations to private companies, such as Academi and Aegis, to operations in Iraq
and Afghanistan, but the majority of responsibility still lies with sovereign states.
Another development that has picked up pace since the advent of the Iraq and Afghanistan wars has been the use of
drones in place of military personnel. As a substitute to a nation's defense department's training of "traditional"
personnel, it is limited. This is due to the need of human remote operators which ultimately have to be trained by defense
departments, albeit at much lower costs and risks, in addition to the limited use of drones by m any countries. However,
there is evidence to suggest this may change in future as the US Navy announced in July 2013 one of the unmanned
drones it has been developing successfully landed and took off from an aircraft carrier without any human controller or
interaction.
The threat of substitutes is assessed as very weak overall.


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Degree of rivalry
Figure 12: Drivers of degree of rivalry in the defense spending market in Israel, 2012

SOURCE: MARKETLINE

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Main players within the market for defense products and systems are large companies with well -established reputations.
Such companies are diversified in terms of the products they manufacture and their geographical presence.
Diversification protects players from any unreliability in their defense business or the possibility of a market exit, and thus
eases rivalry. However this is limited by the fact that market players tend to have similar business models.
There has been a reduction in the number of principal contractors in recent years due to acquisition activities. In some
countries, there is a tendency to nationalize strategic industries to develop capabilities, making it harder for multinational
firms to compete, unless operated in joint ventures or manufactured under license.
On-going consolidation of the global defense industries continues to intensify competition, in the sense that large rivals
are a more significant threat than small ones.
The Israeli defense budget allocation experienced low growth during 2008-2012, increasing rivalry in this market
somewhat.
Overall rivalry in this market is moderate.


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LEADING COMPANIES
Elbit Systems Ltd.
Table 7: Elbit System s Ltd.: key facts
Head office:

Ad vanced Technology Center, Haifa 31053, ISR

Telephone:

972 4 8316 663

Fax:

972 4 8316 944

Website:

www.elbitsystems.com

Financial year-end:

December

Ticker:

ESLT, ESLT

Stock exchange:

Telaviv, NASD AQ

SOURCE: COMPANY WEBSITE

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Elbit Systems (Elbit) is an Israel based company, engaged in the development, manufacture and integration of defense
electronic and electro-optic systems. The company focuses on designing, developing, manufacturing and integration of
command, control, communication, computer, intelligence, surveil lance and reconnaissance (C4ISR) network centric
systems, including unmanned vehicles, for defense and homeland security applications. It also performs upgrade
programs for airborne, land and naval defense platforms. Moreover, the company develops and manu factures systems
and aero structures for the commercial aviation market. The company operates in Israel, the US, Europe, South
America, Asia, and Oceania.
The company mainly operates in the areas of military aircraft and helicopter systems; helmet mounted systems;
commercial aviation systems and aero structures; unmanned air vehicle (UAV) systems; naval systems; land vehicle
systems; command, control, communications, computer and

intelligence

(C4I) systems; electro -optic and

countermeasures systems; homeland security systems; electronic warfare (EW) and signal intelligence (SIGINT)
systems; and various commercial activities.
In military aircraft and helicopter systems, the company supplies a portfolio of advanced airborne electronic and electro optic systems and products to leading military aircraft manufacturers and end users. The company supplies logistic
support services for airborne platforms, including repair and maintenance centers, training and spare parts.
In helmet mounted systems, the company designs and supplies a range of advanced helmet mounted systems (HMS),
including helmet mounted displays (HMDs) for fixed-wing aircraft and rotary aircraft pilots. These include tracking and
display systems, both for day and night flying. The company is engaged in multiple HMS activities.
Under commercial aviation systems and aero structures, the company's activities mainly include vision -based cockpit
concept systems, other avionics systems, electrical systems, pressurization systems and aero structure products.
In unmanned air vehicle (UAV) systems, Elbit Systems designs and supplies integrated unmanned aircraft systems
(UAS) for a range of applications. It designs and manufactures a variety of UAV platforms, including the Hermes and
Skylark families of UAVs. The company also designs and supplies command and control ground station elements that
can be adapted for various types of UAS.
The company's naval systems include naval combat and C4I management systems, shipboard combat system
integration, naval electro-optic observation systems, naval tactical trainers, submarine and surface electronic support
measurement systems, shipboard SIGINT including COMINT and ELINT systems, shipboard decoy countermeasure
launching systems and unmanned surface vessels.


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Under land vehicle systems, the company upgrades and modernizes tanks, other combat vehicles and artillery platforms
both as a prime contractor and as a systems supplier to leading platform manufacturers. The company also develops
and supplies unmanned ground vehicles and robotic devices for a variety of land based missions. In addition, it supplies
training systems for tanks and fighting vehicles.
The company's C4I systems are designed for real-time operational and situational awareness, assuring fighting forces
constant access to command and control. As part of the 'total force' concept, the company provides its customers with
the capabilities to deploy land forces on a networked and joint basis. C4I systems provide comprehensive net -centric
solutions for low intensity conflicts (LIC) and counter-terror activities.
In electro-optical and countermeasures systems, the company designs and manufactures a full range of electro -opticbased solutions for air, land, sea and space applications. The company covers the complete s pectrum of electro-optics
based solutions with products ranging from laser and thermal imaging systems to head -up displays, through ISR
systems - including payloads for space, airborne, naval and land -based missions - to ground integrated sights, electrooptic countermeasures and homeland security solutions.
Under homeland security systems, the company designs, manufactures and integrates a wide range of comprehensive
homeland security systems and products covering diverse scenarios and applications. These include integrated land,
maritime and coastal control and surveillance systems, airport and seaport security systems, border control systems,
"safe city" systems, access and border registration control systems, pilot identification systems, transportation security
systems, C4I homeland security applications, facility perimeter security products, electronic fences, electro -optic
surveillance systems, tactical mini-UAVs and communications systems for defense, police, airport, border patrol, coast
guard, critical infrastructure protection and other homeland security uses.
In EW and SIGINT Systems, through Elisra, the company supplies a range of multi -spectral self-protection suites and
systems for airborne platforms including advanced EW and electronic counterm easures (ECM) systems,
communications jammer solutions, missile warning systems, laser warning systems and radar warning receivers. The
company also furnishes SIGINT systems, including ELINT, COMINT and direction finding (DF) systems, designed for air,
ground and naval platforms and applications.
Elbit's various commercial activities include medical equipment, commercial communications and mobile and wireless
telephone network encryptions, microwave technologies and components and spectrum monitoring and co ntrol systems,
night vision products for the automotive industry, commercial automotive fleet management products, SATCOM
equipment and general manufacturing and machinery services.
The company's subsidiaries include: Elbit Systems Electro-Optics Elop, Elbit Systems Land and C4I, Elbit Systems Kinetics, Opgal Optronics Industries, Elisra Electronic Systems, Elbit Systems of America, EFW, Kollsman, Vision
Systems International and others.

Key Metrics
The company recorded revenues of $2,889 million in the fiscal year ending December 2012, an increase of 2.5%
compared to fiscal 2011. Its net income was $168 million in fiscal 2012, compared to a net income of $90 million in the
preceding year.


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Table 8: Elbit System s Ltd.: key financials ($)
$ million

2008

2009

2010

2011

2012

2,747.5

2,835.7

2,670.1

2,817.5

2,888.6

204.2

214.9

183.5

90.3

167.9

Total assets

2,934.1

3,053.7

3,615.8

3,720.5

3,810.7

Total liabilities

2,210.3

2,220.1

2,610.3

2,792.8

2,760.1

Employees

10,876

11,238

12,317

12,545

12,134

Revenues
Net income (loss)

SOURCE: COMPANY FILINGS

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Table 9: Elbit System s Ltd.: key financial ratios
Ratio

2008

2009

2010

2011

2012

Profit margin

7.4%

7.6%

6.9%

3.2%

5.8%

38.4%

3.2%

(5.8%)

5.5%

2.5%

5.2%

4.1%

18.4%

2.9%

2.4%

Revenue growth
Asset growth
Liabilities growth

(1.9%)

0.4%

17.6%

7.0%

(1.2%)

Debt/asset ratio

75.3%

72.7%

72.2%

75.1%

72.4%

Return on assets

7.1%

7.2%

5.5%

2.5%

4.5%

$252,620

$252,331

$216,782

$224,591

$238,058

$18,775

$19,123

$14,898

$7,198

$13,837

Revenue per employee
Profit per employee

M AR KE TL IN E

Figure 13: Elbit System s Ltd. : revenues & profitability



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Figure 14: Elbit System s Ltd. : assets & liabilities



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ELTA Systems Ltd.
Table 10: ELTA System s Ltd. : key facts
Head office:

100 Yitzchak Hanasi Blvd. P.O.B. 330 Ashdod 77102 , ISR

Telephone:

972 8857 2333

Website:

www.iai.co.il


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ELTA Systems Ltd., a group and subsidiary of Israel Aerospace Industries, is one of Israel’s leading defense electronics
companies.
ELTA’s operations focus on electromagnetic sensors such as radar, electronic warfare, communication, and integrated
solutions.
The company’s products are designed for intelligence gathering, surveillance, target acquisition and reconnaissance,
early warning and control, homeland security, self-protection and self-defense, and fire control applications.
ELTA operates a worldwide marketing network, which also includes customer service and after -sales support activities.

Key Metrics
As a private entity, ELTA Systems Ltd. is not legally obliged to release its financial results.


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Israeli Military Industries Ltd.
Table 11: Israeli Military Industrie s Ltd. : key facts
Head office:

POB 1044 Ramat, Hasharon 47100, ISR

Telephone:

972 3 5485222

Fax:

972 3 5486125

Website:

www.imi-israel.com


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Fully owned by the Israeli government and established in 1933, Israeli Military Industries Ltd. (IMI) is a defense systems
company specializing in the development, integration, manufacturing, and life cycle support of modern land, air and
naval combat systems.
IMI's combat-proven systems are developed by vertically integrated teams, with the Israel Defense Forces (IDF) being its
largest customer.
The company’s products have been qualified with the IDF, US Military (Air Force, Army and Navy) and NATO nations.
In addition to design and development workshops, IMI operates production facilities, supported by laboratories and test
facilities. IMI offers comprehensive end-to-end product support, including training and integrated logistics, maintenance,
and mid-life upgrades.

Key Metrics
As a government controlled entity, Israeli Military Industries Ltd. is not legally obliged to release its financial results.


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Lockheed Martin Corporation
Table 12: Lockheed Martin Corporation: key facts
Head office:

6801 Rockledge Drive, Bethesda, Maryland 20817, USA

Telephone:

1 301 897 6000

Website:

www.lockheedmartin.com

Financial year-end:

December

Ticker:

LMT

Stock exchange:

New York


M AR KE TL IN E

Lockheed Martin is a global security systems and aerospace company. It provides a broad range of management,
engineering, technical, scientific, logistic, and information services. The company serves both domestic and international
customers with products and services that have defense, civil, and commercial applications, with its principal customers
being agencies of the US Government. Its main areas of focus are in defense, space, intell igence, homeland security,
and information technology, including cyber security.
The company divides its business operations into four segments: electronic systems, aeronautics, information systems
and global services (IS&GS), and space systems.
The electronic systems segment provides surface ship and submarine combat systems; sea -based missile defense
systems; littoral combat ships; nuclear instrumentation and control systems for naval submarines, and aircraft carriers,
and surface warships. In addition, the segment also provides air and defense missile systems; ship systems integration,
air-to-ground precision strike weapons systems; tactical missiles; munitions; and fire control and navigation systems for
rotary and fixed-wing aircraft. The segment also offers manned and unmanned ground vehicles; mission operations
support, readiness, engineering support, and integration services; simulation and training services; and energy
programs. The segment's major programs include Aegis Combat System; Patriot Advanc ed Capability-3 (PAC-3) and
Terminal High Altitude Area Defense (THAAD) air and missile defense programs; Multiple Launch Rocket System
(MLRS), Hellfire, and Joint Air-to-Surface Standoff Missile (JASSM) tactical missile programs; Apache Fire Control
System; Littoral Combat Ship (LCS); and Special Operations Forces Contractor Logistics Support Services program.
Lockheed Martin's aeronautics segment is engaged in the research, design, development, manufacture, integration,
sustainment, support, and upgrade of advanced military aircraft, including combat and air mobility aircraft, unmanned air
vehicles, and related technologies. The segment also provides logistics support, sustainment, and upgrade modification
services for its aircraft. Its major programs include: F-35 Lightning II Joint Strike Fighter; F-16 Fighting Falcon; F-22
Raptor; C-130J Hercules; and C-5M Super Galaxy. In addition, the segment is involved in advanced development
programs incorporating innovative design and rapid prototype applications.
The company's IS&GS segment provides management services, information technology (IT) solutions and advanced
technology expertise to a broad spectrum of applications to the US government and other customers. The segment
supports the needs of customers in human capital planning, data protection and sharing, cyber-security, financial
services, health care, energy and environment, security, space exploration, biometrics, and transportation. IS&GS' major
programs include: Command and Control, Battle Management, and Communications (C2BMC) contract; En-Route
Automation Modernization (ERAM) contract; Hanford Mission Support contract; and National Science Foundation's US
Antarctic Support program.


0188 - 2405 - 2012
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The space systems segment is engaged in the design, research and deve lopment, engineering, and production of
satellites, strategic and defensive missile systems, and space transportation systems. The segment also offers activities
related to the Space Shuttle and its planned replacement. Its major programs include: Trident II D5 Fleet Ballistic Missile;
Space-Based Infrared System (SBIRS) program; Orion Multi-Purpose Crew Vehicle (Orion) program; Advanced
Extremely High Frequency (AEHF) system; Mobile User Objective System (MUOS); and Global Positioning System
(GPS) III. In addition, the space systems segment also has an ownership interest in United Launch Alliance, which
provides expendable launch services for the US Government, and in United Space Alliance, which provides processing
activities for the Space Shuttle program.
The Israeli Air Force has a fleet of almost 200 F-16 fighters, with an order in place for 20 of Lockheed’s F-35A fighters.

Key Metrics
The company recorded revenues of $47,182 million in the fiscal year ending December 2012, an increase of 1.5%
compared to fiscal 2011. Its net income was $2,745 million in fiscal 2012, compared to a net income of $2,655 million in
the preceding year.

Table 13: Lockheed Martin Corporation: key financials ($)
$ million

2008

2009

2010

2011

2012

41,372.0

43,867.0

45,671.0

46,499.0

47,182.0

3,217.0

2,973.0

2,878.0

2,655.0

2,745.0

Total assets

33,439.0

35,167.0

35,113.0

37,908.0

38,657.0

Total liabilities

30,574.0

30,982.0

31,616.0

36,907.0

38,618.0

146,000

140,000

132,000

123,000

120,000

Revenues
Net income (loss)

Employees

M AR KE TL IN E

Table 14: Lockheed Martin Corporation: key financial ratios
Ratio
Profit margin

2008

2009

2010

2011

2012

7.8%

6.8%

6.3%

5.7%

5.8%

Revenue growth

(1.2%)

6.0%

4.1%

1.8%

1.5%

Asset growth

15.6%

5.2%

(0.2%)

8.0%

2.0%

Liabilities growth

59.9%

1.3%

2.0%

16.7%

4.6%

Debt/asset ratio

91.4%

88.1%

90.0%

97.4%

99.9%

Return on assets

10.3%

8.7%

8.2%

7.3%

7.2%

$283,370

$313,336

$345,992

$378,041

$393,183

$22,034

$21,236

$21,803

$21,585

$22,875

Revenue per employee
Profit per employee


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Figure 15: Lockheed Martin Corporation: revenues & profitability


M AR KE TL IN E

Figure 16: Lockheed Martin Corporation: asse ts & liabilities



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MACROECONOMIC INDICATORS
Country Data
Table 15: Israel size of population (million), 2008 –12
Year

Population (million)

% Growth

2008

7.3

1.8%

2009

7.5

2.4%

2010

7.6

1.8%

2011

7.8

1.9%

2012

7.9

1.8%

SOURCE: MARKETLINE

M AR KE TL IN E

Table 16: Israel gdp (constant 2000 price s, $ billion), 2008–12
Year

Constant 2000 Prices, $ billion

% Growth

2008

156.1

4.1%

2009

157.8

1.1%

2010

165.7

5.0%

2011

173.3

4.6%

2012

178.7

3.1%

SOURCE: MARKETLINE

M AR KE TL IN E

Table 17: Israel gdp (current price s, $ billion), 2008–12
Year

Current Prices, $ billion

2008

201.9

20.7%

2009

195.1

(3.4%)

2010

217.4

11.4%

2011

243.1

11.8%

2012

255.1

5.0%

SOURCE: MARKETLINE


% Growth

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0188 - 2405 - 2012
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Table 18: Israel inflation, 2008–12
Year

Inflation Rate (%)

2008

4.6%

2009

3.3%

2010

2.7%

2011

3.5%

2012

1.8%

SOURCE: MARKETLINE

M AR KE TL IN E

Table 19: Israel consumer price index (absolute), 2008–12
Year

Consumer Price Index (2000 = 100)

2008

107.3

2009

110.9

2010

113.9

2011

117.8

2012

119.9

SOURCE: MARKETLINE

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Table 20: Israel exchange rate, 2008–11
Year

Exchange rate ($/ILS)

Exchange rate (€/ILS)

2008

3.5909

5.2676

2009

3.9321

5.4736

2010

3.7375

4.9596

2011

3.8500

4.9473

SOURCE: MARKETLINE


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APPENDIX
Methodology
MarketLine Industry Profiles draw on extensive primary and secondary research, all aggregated, analyzed, cross checked and presented in a consistent and accessible style.
Review of in-house databases – Created using 250,000+ industry interviews and consumer surveys and supported by
analysis from industry experts using highly complex modeling & forecasting tools, MarketLine’s in -house databases
provide the foundation for all related industry profiles
Preparatory research – We also maintain extensive in-house databases of news, analyst commentary, company
profiles and macroeconomic & demographic information, which enable our researchers to build an accurate market
overview
Definitions – Market definitions are standardized to allow comparison from country to country. The parameters of each
definition are carefully reviewed at the start of the research process to ensure they match the requirements of both the
market and our clients
Extensive secondary research activities ensure we are always fully up-to-date with the latest industry events and
trends
MarketLine aggregates and analyzes a number of secondary information sources, including:
-

National/Governmental statistics

-

International data (official international sources)

-

National and International trade associations

-

Broker and analyst reports

-

Company Annual Reports

-

Business information libraries and databases

Modeling & forecasting tools – MarketLine has developed powerful tools that allow quantitative and qualitative data to
be combined with related macroeconomic and demographic drivers to create market models and forecasts, which can
then be refined according to specific competitive, regulatory and demand -related factors
Continuous quality control ensures that our processes and profiles remain focused, accurate and up -to-date


0188 - 2405 - 2012
Page | 31

Industry associations
Metal, Electrical and Infrastructure Industries Association
Tel.: 972 3 5198830
Fax: 972 3 5103152
www.industry.org.il

Israeli Association of Electronics & Software Industries (IAESI)
P.O. Bo x, 50026. Tel-Avi v 61500, ISR
Tel.: 972 3 5118862
www.iaesi.org.il

The International Coordinating Council of Aerospace Industries Associations
(ICCAIA)
1000 Wilson Blvd., Suite 1700, Arlington, VA 22207, USA
www.iccaia.org

Related MarketLine research
Industry Profile
Global Defense Spending
Defense Spending in Asia-Pacific
Defense Spending in Europe
Defense Spending in the United States
Defense Spending in Egypt


0188 - 2405 - 2012
Page | 32

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