After acquiring the British Pearson company, the Rafael company marks the next target in its activities abroad. “Calcalist” has learned that Rafael is conducting advanced negotiations to establish a joint company with the Hungarian government that will deal with advanced short-range anti-tank systems.
Rafael is already active in Hungary through the company DND, which is held through the arm of Rafael’s European operations, ERCAS. Arkas was founded by Raphael, registered in the Netherlands and operates from the UK. The company was established to assist in the marketing of Rafael products in Europe and to serve there as a holding company for corporations that Rafael wishes to establish or enter as a shareholder.
DND will establish a joint venture with N7, a company wholly owned by the Hungarian government. The joint company will build new production lines for anti-tank systems. The lines are needed to meet the demands of Rafael’s customers in the Far East and Europe. 7N will fully finance the construction of the production lines at a cost of 50 million Hungarian florins (approximately NIS 100 million).
Rafael will invest about 10 million euros in the project in the form of a project guarantee. The first order from the joint venture is already in the hands of the Hungarian government, which has already made an advance for the order in the amount of about 10 million euros.
DND will hold 51% of the joint company’s shares and the rest will be held by the Hungarian N7. The details of the agreement are actually closed and await the approval of the two governments. The Companies Authority approved the deal, but the Ministry of Defense and the government have not yet approved it.
Hungary purchased iron dome systems from Rafael a year and a half ago, along with Slovakia and the Czech Republic. In recent years, Hungary has been purchasing defense and radar systems from the aerospace industry, from Rafael and Malbit Systems.
Rafael, the majority of whose sales are still to the defense system in Israel, is trying to increase the component of its sales abroad. Last month it purchased the British company Pearson for 100 million pounds and another 30 million pounds contingent on future performance.
Pearson manufactures mechanical engineering equipment for tapping evacuation, tapping protection and bridging equipment. The company’s products are designed to protect an armored combat vehicle. According to estimates, Rafael is trying to gain a foothold in this field in Europe through production in the UK, and as a complementary field to its existing operations. In addition, Rafael may leverage its “wind jacket” activity (an active protection system for tanks and armored combat vehicles) as an expanding activity for Pearson’s activities.
In the first half of 2022, Rafael’s revenues amounted to NIS 4.8 billion, an increase of 7% compared to 2021. However, the operating profit during this period was NIS 105 million – an operating profit margin of only 2.2%. It ended the half with a loss of NIS 161 million.