Rafael CEO Warns of Economic Strain Amid Record Sales Growth

Defense contractor Rafael reported significant growth in the second quarter of the year, with sales increasing by 20% in shekels (45% in dollars) to NIS 5.6 billion (USD 1.91 billion). New orders surged by 39% (68% in dollars) to NIS 6.9 billion (approximately USD 2.3 billion), partly influenced by the "Operation Iron Swords" against Iran. CEO Yoav Turgeman highlighted that over 60% of orders in the first half of the year were for export, a substantial increase from the previous year.

Turgeman expressed concern over the strengthening shekel, which diminishes the value of dollar and euro-denominated orders when converted, negatively impacting profitability and competitiveness. He urged Finance Minister Bezalel Smotrich and Bank of Israel Governor Prof. Amir Yaron to intervene in the foreign exchange market, stating that the industry cannot sustain such currency fluctuations. "The state's intervention is required. It was required in the past, and even more so now," Turgeman stated, noting a drop in the shekel-to-dollar exchange rate from approximately 3.67 to below 3 within a year.

Rafael's sales in the first half of 2026 reached NIS 10.6 billion (approximately USD 3.57 billion), a 13.6% increase in shekels (35% in dollars) compared to the same period in 2025. Net profit for the first half of 2026 was NIS 663 million (approximately USD 222.8 million), an 8% increase (28% in dollars). The company is responsible for nearly 100% of Israel's air defense. Turgeman attributed the growing demand for Rafael's products to their impressive performance during the conflict with Iran, which demonstrated their quality.

Rafael Chairman Prof. Yuval Steinitz reiterated his call for the company to go public. He believes an IPO would enable Rafael to expand investments in groundbreaking technologies, deepen its international operations, attract top talent, and maintain its technological edge, all while safeguarding Israel's security interests. Steinitz emphasized that strengthening Rafael as a leading defense industry requires adapting its growth infrastructure to future challenges.