TEL AVIV (Reuters) - Israeli defense electronics company Elbit Systems (ESLT.TA) expects to benefit from increased defense spending globally in response to Donald Trump’s elevation to the White House, it said on Wednesday after reporting a rise in fourth-quarter earnings.
While low oil prices have eaten into some clients’ defense budgets, tensions in the South China Sea, Russia’s intervention in Syria and particularly the policies being pushed by U.S President Trump have been a boon for the defense sector, said Elbit Chief Executive Bezhalel Machlis.
“Trump’s election is creating a new vibe in the defense arena,” Machlis said. “On the macro-level, there’s a substantial increase in defense budgets.”
Elbit is Israel’s largest publicly traded defense business, specializing in drones, pilot helmet displays and cyber security systems.
Machlis said there is a “huge opportunity” for Elbit as Trump pressures NATO allies to increase defense spending to 2 percent of GDP, noting that Elbit’s European sales jumped by nearly $100 million in 2016.
The company also hopes to benefit from Trump’s pledge to build a wall along the United States’ Mexican border, Machlis said, adding that Elbit is in talks to expand its contract to help to secure the frontier.
In the last three months of 2016 Elbit earned $1.82 per diluted share excluding one-time items, up from $1.74 a year earlier, on revenue up 7.6 percent to $953.7 million.
Elbit’s order backlog, meanwhile, increased to $6.9 billion at the end of 2016 from $6.6 billion a year earlier.
Machlis also said that Elbit aims to expand its presence in the civilian market through drone sales and avionics technology for commercial aircraft.
The company also plans to release “augmented-reality” sunglasses for cyclists this year. Using the company’s helmet-display technology, the glasses offer track data, video capture and other features.
Elbit declared a dividend of 44 cents per share, up from 40 cents in the third quarter.
The company’s Tel Aviv-listed shares were down 0.6 percent at 1232 GMT (8:32 a.m. ET), slightly underperforming the main index .TA125.
Additional reporting by Tova Cohen; Editing by David Goodman