Elbit Systems Sees Record Orders Amid European Defense Spending Surge
Translated & summarized from Bizportal by baba
Elbit Systems has reached a record $32 billion order backlog, driven by significant European defense spending increases. The company reported a 16% revenue jump to $2.29 billion in Q2, with net profit rising to $173.6 million. While Spain canceled a major rocket system deal due to import restrictions on Israel, Greece, Denmark, the Netherlands, and Germany have placed substantial orders for Elbit's PULS rocket launcher. European nations are boosting defense budgets in line with NATO targets, with Elbit increasingly incorporating local production into its European contracts.
The story in 6 lines · by baba
- Elbit Systems' order backlog hit a record $32 billion, with 74% from international clients.
- European nations are increasing defense spending, with NATO members aiming for 5% of GDP by 2035.
- Spain canceled a $576 million rocket system deal with Elbit due to restrictions on Israeli imports.
- Greece, Denmark, the Netherlands, and Germany have placed significant orders for Elbit's PULS rocket launcher.
- Elbit's Q2 revenue increased 16% to $2.29 billion, and net profit rose to $173.6 million.
- European defense procurement financing instruments like SAFE require at least 65% of components from the EU or allied nations.
Elbit Systems has achieved a record order backlog of $32 billion as of the end of June, with approximately 74% originating from international clients. This represents a significant increase from the $24 billion backlog a year prior, largely attributed to new orders from Europe. The company's second-quarter revenues rose by 16% year-over-year to $2.29 billion, with net profit climbing to $173.6 million from $125.7 million.
Europe contributed $563.3 million to revenues in the second quarter, a figure similar to the previous year, though its share of total revenue decreased to 24.6% from 28.6%. Elbit's management explained this as a temporary effect, noting that large defense contracts are recognized over several years, with about 42% of the current backlog expected to be executed by the end of 2027. The company has recently secured two major European contracts: one for $1.64 billion with an undisclosed country for long-range precision rocket artillery, and another for approximately $1.4 billion from a different European client.
Elbit's PULS rocket launcher system, which can be mounted on trucks or tracked vehicles and fire various munitions, has been ordered by the Netherlands, Denmark, Germany, and Greece. Spain initially placed an order but later canceled it. European nations are increasing their defense budgets, with NATO members setting a target of 5% of GDP by 2035, including 3.5% for core defense spending. In 2025, European countries and Canada are projected to spend an average of 2.53% of GDP on defense, up from 1.96% in 2024.
Spain's defense spending is estimated at 2% of GDP for 2025 and 2026, a notable increase after a decade of lower spending. This rise is linked to a defense industrial plan approved by the Spanish government in April, which allocated an additional 10.5 billion euros. Prime Minister Pedro Sánchez has stated that Spain's defense commitments require more than 2% of GDP, and the country is leveraging a letter from NATO Secretary General Mark Rutte for flexibility regarding the spending targets.
The European Union has established the SAFE financing instrument with 150 billion euros to support defense procurement, requiring at least 65% of component costs to originate from the EU, the European Economic Area, or Ukraine. Poland has received the largest allocation of 44 billion euros, while Greece has been approved for approximately 788 million euros. Spain requested 1 billion euros, which was approved in February, but has not yet received any funds. Elbit's contracts with European nations often include local production requirements, such as its deal with Greece and its collaboration with KNDS for the German contract. The company is also establishing a European production center for its laser warning systems.
Spain's Ministry of Defense had initially awarded a contract worth 576 million euros for the SILAM mobile long-range rocket system, based on Elbit's PULS, to a joint venture of EM&E and Rheinmetall Expal. This contract included technology transfer to Spain. However, the award was canceled in September 2023, and shortly after, Spain enacted a law prohibiting defense equipment exports and imports with Israel due to the Gaza war. This also affected a Rafael missile procurement. A revised proposal for SILAM, excluding Israeli components, was submitted in January, with GMV joining to develop the fire control system. A decision was still pending in early August, with the Spanish Ministry of Defense requesting an increased share of Spanish industry involvement. The most challenging aspect of the project involves redeveloping the guided rockets' design, testing, and certification.
Other European countries have proceeded with PULS orders: Greece signed a contract worth about 750 million dollars for launchers, rockets, and loitering munitions. Denmark ordered eight launchers for approximately 125.7 million euros, the Netherlands ordered 20 launchers for $305 million, and Germany signed a contract for about $57 million. Elbit's export revenue in 2025 is projected to reach $19.2 billion, with over half from government-to-government deals. Missile, rocket, and air defense systems constitute the largest segment of these deals.
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