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UPDATE 1-Israel's Elbit Systems sees 2016 growth from Europe, Asia

Published 23/03/2016, 02:23 am
© Reuters.  UPDATE 1-Israel's Elbit Systems sees 2016 growth from Europe, Asia
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(Releads with comments from CEO interview, adds share reaction)

By Tova Cohen

TEL AVIV, March 22 (Reuters) - Israeli defence electronics firm Elbit Systems ESLT.TA expects further revenue and profit growth in 2016 as the European defence market recovers and Asia-Pacific remains strong, its chief executive said on Tuesday.

Elbit ESLT.O , Israel's largest non-government owned defence firm, has seen renewed interest in its technologies in Europe, where it won several important contracts in 2015.

Its European revenue in the fourth quarter accounted for 21 percent of the total, up from 18 percent a year earlier while Asia-Pacific accounted for 22 percent.

CEO Bezhalel Machlis said the migration crisis and security fears create big opportunities for Elbit in Europe. The company offers border control systems and will also benefit from increased defence spending.

In February an Elbit joint venture won a contract from the UK Defence Ministry's military flight training programme worth about 500 million pounds ($711 million).

In Asia-Pacific Machlis cited India and Australia as markets where defence spending is growing sharply.

The maker of drones, helmet display systems for pilots, electronic warfare and cyber security systems earned $1.47 per diluted share in the fourth quarter, up from $1.03 a year earlier and above a forecast of $1.45 in a Reuters poll of analysts.

Led by airborne systems, revenue rose to $886.6 million from $850.3 million.

"I believe we are well positioned for the future. I think we can do better in 2016 and that is what we aim for," Machlis told Reuters, pointing to Elbit's record order backlog at the end of 2015 of $6.6 billion, up from $6.3 billion a year earlier.

"Our backlog will be transformed into revenue and profit in the near future."

One area where revenue is shrinking is Latin America, where economies have been hit by falling oil prices. The region accounted for 11.6 percent of Elbit's revenue in the fourth quarter, down from 16.8 percent a year ago.

In January Brazilian planemaker Embraer EMBR3.SA and Elbit's Brazilian subsidiary AEL said they were shutting down their joint venture to explore the unmanned aerial vehicle market. wanted to save some costs and to be more focused. We didn't give up on the UAV market in Brazil. It's an important market for us and we will continue to invest in bidding," Machlis said.

Elbit declared a dividend of 40 cents a share for the fourth quarter, up from 37 cents in the third quarter.

Its Nasdaq-listed shares were up 3.3 percent to $93.24 by 1520 GMT. ($1 = 0.7029 pounds) (Editing by Keith Weir)

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