November 13, 2012 / 8:00 AM / in 5 years

UPDATE 2-Israel's Elbit Systems sees Latam, Asia defence growth

* Q3 diluted EPS $0.95 vs $0.88 forecast

* Revenue $677.5 mln vs $663.7 mln year ago

* CEO sees further growth in Latin America, Asia-Pacific

* Shares up 1.3 pct in flat Tel Aviv market

By Tova Cohen

TEL AVIV, Nov 13 (Reuters) - Buoyant military spending in Latin America and Asia-Pacific is helping Israeli defence electronics firm Elbit Systems to cope with declining budgets in the United States and Europe, it said on Tuesday.

Posting better-than-expected third-quarter net profit, Elbit President and Chief Executive Joseph Ackerman said the next quarter “will be a good one” though he declined to give details.

“We will continue to be careful with spending, we will be more efficient with research and development and we will continue to see growth in South America and Asia,” Ackerman told Reuters.

U.S. defence spending is declining but for defence electronics, in which Elbit specialises, the reduction is much lower than for large platforms.

“My goal is that Elbit America won’t be impacted by the trend,” said Ackerman, who will retire at the end of March after 16 years in the post to be replaced by executive vice president Bezhalel Machlis.

Ackerman said he expected to see a continued slowdown in European defence spending in the coming year, including for Elbit.

Elbit, Israel’s largest publicly traded defence firm, specialises in electronics and intelligence technology such as unmanned air vehicles, command and control and training systems - specialities proving attractive to some emerging economies.

Third-quarter profit beat expectations, boosted by cost reductions, lower taxes and strong sales in Latin America and Asia-Pacific.

Cost-cutting measures included lower R&D spending and the reduction of a few hundred employees from a workforce of over 12,000 as workers who left or retired were not replaced.

Shares in Elbit were up 1.3 percent to 136.6 shekels at 1025 GMT, compared with a flat broader market.

Elbit posted earnings per share in the quarter of 95 cents compared with 85 cents a year earlier, while revenue rose to $677.5 million from $663.7 million. Analysts were expecting Elbit to earn 88 cents a share on revenue of $691.4 million.

“The results indicate stability, an achievement in and of itself given the macro environment, with improvement in profitability,” Leumi Capital Markets analyst Ella Fried said.

The company’s backlog of orders as of Sept. 30 was $5.53 billion, up from $5.47 billion at the end of June.

“Despite all that is happening in the world we managed to grow our backlog,” Ackerman said. “For us, this is the number one objective - not to grow it very high because then we would have to give up profit but we manage and we will be successful in the future in gradually growing our backlog.”

Elbit declared a dividend of 30 cents per share for the third quarter, the same as in the second quarter.

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