UPDATE 2-Elbit Systems Q3 profit up 41 pct, sees better 2008

(Adds CEO quotes, analyst comment, share price)

By Tova Cohen

TEL AVIV, Nov 14 (Reuters) - Israeli defence contractor Elbit Systems (ESLT.TA) (ESLT.O) on Wednesday posted a 41 percent rise in third-quarter net profit on higher revenues and forecast a better performance in 2008.

"We can certainly say 2008 is going to be a better year than 2007," President and CEO Joseph Ackerman told Reuters, without elaborating. "I don't expect any surprises in the fourth quarter of this year."

Ackerman said the company's sales will not be hurt even if the U.S. economy slows.

The maker of unmanned air vehicles (UAV) and defence electronics said quarterly net profit rose to $26.4 million, or 62 cents per diluted share, from $18.7 million, or 45 cents a diluted share, a year earlier.

Revenues jumped 38 percent to $518.9 million.

Analysts on average estimated the company would earn 59 cents a share on revenues of $480.1 million, according to Reuters Estimates.

Elbit fell 2.1 percent to 218.3 shekels by 1115 GMT having hit an all-time high of 224.8 earlier, and tracking a record high on Nasdaq overnight. The stock has risen 83 percent in the past 12 months.

GROWTH

Although the United States is an important market for the company, Ackerman said Elbit's business will grow regardless of what happens with U.S. defence spending.

"We truly believe what we are doing, mainly defence electronics, is going to be growing even if total spending will decrease," he said. "In our relevant market we don't see risk."

Elbit's backlog of orders reached a record $4.55 billion from $3.79 billion at the end of December. Elbit said 71 percent of the backlog is for sales outside Israel and half of the backlog is to be delivered by the end of 2008.

Ackerman said growth was supported by organic revenue growth of 19 percent and acquisitions.

He said Elbit has not changed its strategy of seeking to grow both organically and through acquisitions.

"However, I won't be surprised if 2008 will be devoted to digesting our acquisitions," he said, referring to Tadiran, Elisra and Ferranti. "Although, if a good opportunity will pop up we will look into that."

Elbit, Israel's largest publicly traded defence firm, is part of a group led by Thales (TCFP.PA) that won a 700 million pound contract to supply Britain with UAVs.

A weak spot for Elbit remains 70-percent owned Elisra, a maker of electronic warfare and electronic intelligence systems.

"We are quite unhappy with Elisra results. We are working hard to improve that," Ackerman said. "It took us more time than expected but I do hope that in 2008 we'll see improvement."

He expects Elisra to post a flat bottom line for 2007.

Ackerman said he sees a growing market for Elbit's Hermes family of UAVs. It is developing the Hermes 900, a larger version of the 450 used by military forces worldwide and deployed in Iraq and Afghanistan.

Elbit has begun talks with customers for the 900 and because it uses the same infrastructure as the 450, "we expect all those who acquired the 450 will be adding the 900 to their fleet", he said.

The board declared a dividend of 17 cents per share for the quarter to be paid on December 10. (Editing by Louise Ireland)