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Tadiran Communications Europeans freezing orders CFO Nehemia Shiff European customers are telling us, We don't do business with countries at war
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Tadiran Communications Europeans freezing orders CFO Nehemia Shiff European customers are telling us, We don't do business with countries at war

Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) subsidiary Tadiran Communications Ltd. (TASE: TDCM) published its financial report for the second quarter of 2006 today. The company posted $63.3 million revenue, 11 percent less than the $71.2 million posted in the corresponding quarter of 2005.

Tadiran Communications posted a net profit of $10.9 million for the second quarter, 17.2 percent of sales, compared with $12.1 million for the corresponding quarter of last year. The company posted a gross profit of $27.5 million for the second quarter, compared with $36.9 million for the corresponding quarter, and it posted an operating profit of $8.6 million for the second quarter, compared with $15 million for the corresponding quarter.

Tadiran Communications' net cash flow from current activity was $15.4 million for the second quarter, compared with $4.3 million for the corresponding quarter of last year.

Tadiran Communications said its orders backlog totaled $307 million at the end of the second quarter, of which 72 percent were exports. 38 percent of the orders backlog is scheduled for delivery during 2006. The orders backlog has declined from $347 million at the end of 2005.

Tadiran Communications CFO Nehemia Shiff said, "We're meeting our work plan for sales, while simultaneously conducting intense marketing activity in Israel and internationally." He said the company was developing new products and production lines with growth potential for both the military and civilian markets. The company is also working hard on the development of next generation radio communications sets for the IDF land, sea and air forces.

War in the north will cut orders

In its board of director's report, Tadiran Communications said the war in the north would affect the company during the third quarter of the year. The company claims that customers, mostly in Europe, were delaying the procurement of the company's products, and predicts that this will adversely affect orders.

On the other hand, Tadiran Communications expects that the war might create new needs, but that it is premature to assess long-term effects.

Shiff explained to "Globes" the impact of the war in the north on the company's business. "We have a number of things on the agenda in Europe, and our customers are freezing relations. We haven't received any cancellations, but the excuse of our customers is that they don't do business with countries at war."

"Globes": Will this harm your results for the coming quarters?

Shiff: "We're not talking about short-term revenue. Tadiran Communications doesn't buy and sell from one day to the next. However, there is concern that a fall in the volume of orders received during 2006 will affect the results for the coming years, but it's premature to assess this effect, especially while the war is continuing."

What is the war's direct effect of the war on Tadiran Communications?

"The company's plant in Tel Hai has been closed since the start of the war. The staff at our development center in Kiryat Shmona have been moved to the center of the country, and are working normally."