Elbit sees $60-65M write-down due to blocked deal

Elbit sees $60-65M write-down due to blocked deal

Israeli electronic defence firm Elbit Systems said on Sunday it expected a $60-$65 million drop in 2011 fourth quarter net profit after it lost a contract with a foreign customer, identified by the Israeli media as Turkey, that the government did not support.

February 12, 2012 2:44 by Reuters

The company announced in December that the Israeli government, for political reasons, did not renew its authorisation to complete a $90 million contract awarded several years ago.

Elbit has declined to name the foreign customer. Israeli media reports said the contract was to supply Turkey’s air force with surveillance systems.

“The company is currently in discussions with the Israeli Ministry of Defense regarding arrangements with respect to claims of the company as a result of cessation of the program,” Elbit said in a statement.

The ministry, which also would not state who the customer was, said in December that as a policy it does not elaborate how or why it makes its defence export-policy decisions.

Ties between once-close allies Israel and Turkey have deteriorated in recent years and reached a crisis point in May 2010 over Israel’s killing of nine Turks aboard a ship trying to breach its naval blockade of the Gaza Strip.

Israeli Defence Minister Ehud Barak said in a leaked speech in 2010 that Ankara’s newly appointed intelligence chief was a “friend of Iran” who might betray Israel’s secrets.

Asked about the decision not to renew Elbit’s authorisation, an Israeli security official had said, “relations with the country in question are extremely important … Decisions on this particular matter were directly related to the specific system itself and not the general relations between the countries”.

Elbit posted $43.7 million of net profit in the fourth quarter of 2010. *image from motionpicturearmourer.com