CEO Bezhalel Machlis says an expansion of the Abraham Accords could unlock major Gulf markets as Elbit reports record backlog and rising global demand.
The continuing arms race in Europe and the IDF’s extensive acquisition of combat systems following the October 7 war led Elbit Systems’ order backlog in the third quarter to a record $25.2 billion, about $1.4 billion above the backlog it presented at the end of the second quarter.
A day after reporting the largest deal in its history, providing a “strategic solution” worth $2.3 billion to an undisclosed country, the defense company, controlled by Michael Federmann and led by CEO Bezhalel (Butzi) Machlis, reported a 12% increase in revenue in the third quarter compared to the same period last year, totaling $1.92 billion. Elbit said it was satisfied with its quarterly operating profit of 9.7%, which is in line with the 10% operating-profit target it set for itself.
The publication of the quarterly results comes amid concerns over the F-35 aircraft deal being advanced by U.S. President Donald Trump with Saudi Crown Prince Mohammed bin Salman, which has raised alarms in Israel over potential harm to its qualitative military edge in the Middle East. It is still unclear whether the aircraft deal with Saudi Arabia will include normalisation with Israel, an outcome that could open the door for Israeli defence firms to access massive Saudi defence budgets.
According to Machlis, “The Abraham Accords have opened up additional opportunities for Elbit; it has operations in some of those countries and owns a company in the United Arab Emirates. Any country that joins this system of agreements, including Saudi Arabia, which has very large defense expenditures, certainly opens new opportunities for Elbit.”
Meanwhile, U.S. aerospace giant Boeing is accelerating development of the next-generation fighter jet that will serve the United States in the coming decade, the F-47, expected to replace the F-22. Machlis declined to say whether Elbit is interested in joining the project, similar to its involvement in Lockheed Martin’s F-35 program, where it supplies pilot helmets. “This is a highly classified project, and I cannot comment on the matter,” he said.
In the third quarter, Israel’s share of Elbit’s sales rose to 33.4% of total sales, compared to 29.1% in the corresponding quarter last year. Between June and September, Elbit’s revenues from arms sales to the Ministry of Defense amounted to approximately $642 million, while in the first nine months of the year they totaled approximately $1.92 billion. Its quarterly net profit reached $133.4 million, a 68% increase compared to $79 million in the same quarter last year.
However, Elbit sees its main growth in the coming quarters in Europe, against the backdrop of the ongoing Russia-Ukraine war, which has been raging since early 2022. In the third quarter, revenues from European defense deals reached $536 million, accounting for 27.9% of total sales.
The majority of sales to Europe and Israel were driven by Elbit’s land systems division, which grew by more than 40% in the third quarter compared to the same period in 2024, reaching $594 million, or 31% of total revenue. This division includes last August’s major deal with Serbia, in which Elbit is expected to supply precision missiles, advanced Hermes-900 drones, communication and control systems, electronic warfare capabilities, and more, totaling $1.63 billion.
CEO Machlis told Calcalist that during the third quarter, Elbit expanded its presence in the European market, opening new operational sites in Germany and Sweden, in addition to existing facilities across the continent. “Last year, we crossed the $2 billion sales threshold in Europe due to strong demand and thanks to our presence in all countries on the continent. Our strategy differentiates Elbit from other companies that have not succeeded in this,” he said.
He added that Elbit’s European sales will likely continue to grow, reducing Israel’s share of total revenue over time. According to Machlis, “We have tremendous opportunities in Europe, as well as in Asia-Pacific and the U.S., and we are pursuing all of them and striving to excel. The end of the war in Israel may also allow the execution of deals that have been delayed until now.”
Machlis also did not rule out additional “mega-deals” of similar scale to those Elbit announced over the past three months. “Our pipeline is diverse and includes small deals, many medium-sized ones, large deals, and very large deals. It is a rich and unprecedented pipeline,” he said.
During the quarter, outstanding payments owed to Elbit rose slightly from $2.9 billion to $3.1 billion. A significant portion of these debts comes from the Ministry of Defense, which has been delaying payments to suppliers amid its budget dispute with the Ministry of Finance. Calcalist revealed on Tuesday that in recent months the Ministry of Defense has accumulated an unprecedented debt of approximately 10 billion shekels to the defense industries and hundreds of suppliers across the economy.
Machlis declined to specify the Ministry of Defense’s debt to Elbit but said: “There are considerable and significant debts, and we are working with all parties, both the Ministry of Finance and the Ministry of Defense, to have them paid. I have no doubt they will eventually be paid, but it is unfortunate that this is the situation, since the main victims are the small suppliers. We have approximately $100 million in free cash flow from payments coming in from other countries, which helps us manage the gap created by the Ministry of Defense’s debt, and I am trying to minimize as much as possible the harm to the small suppliers that Elbit works with.”
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