NEWTOWN, Conn. -- Despite the COVID-19 crisis, sales at Rafael stayed a record levels in 2020. Sales for 2020 held steady at $2.75 billion, up almost 1 percent from $2.72 billion in 2019. Net profit for the year was $94 million, compared to $111 million in 2019. For 2020, the company reported that research and development accounted for 9.3 percent ($255 million) of sales.
This success is due to the need of Israel to stay vigilant thanks to ever present trouble around its borders. This heightened state of regional turmoil means the need for Rafael's products will remain acute for some time to come. Of particular interest are air and missile defense systems, such as Iron Dome and David's Sling. Rafael's Iron Dome proved effective during clashes between Israel and militants in the Gaza Strip. According to reports, the system performed well, intercepting hundreds of rockets headed toward major population centers in Israel. Israeli officials say it has a success rate as high as 90 percent. The success of the Iron Dome against rocket attacks by Hamas and Hezbollah is helping to spur foreign interest in this system. Pyongyang's antagonistic behavior has South Korea considering the Iron Dome, but the United States decided to purchase the system before South Korea does. The company scored a couple of wins in the U.S. of late, most recently with its Iron Dome system. In 2019, the U.S. Army bought two of these systems as an interim measure to fulfill the service's cruise missile defense capability. Raytheon and Rafael jointly developed Iron Dome, and the system is partly manufactured in the U.S. The success of the Iron Dome in countering large barrages of rockets in the mid-2021 Gaza conflict has created interest in further U.S. acquisitions of the system. Earlier, the U.S. Army selected Rafael's Trophy active protection system to protect M1 Abrams tanks. Over the past few years, the U.S. has ordered enough systems to equip four brigades of tanks. Rafael and its partner, Leonardo DRS, are currently testing a smaller version of the system for use on smaller armored vehicles such as the Bradley and Stryker. This system has also garnered interest in the U.K. In June 2021, Trophy was selected for the next phase of detailed assessment and integration for the UK Army’s Challenger 3 tanks. In its major segments, Rafael holds a reasonable share of the air-to-air missile market in spite of heavy competition from rivals such as Raytheon and MBDA. According to FI's Platinum Forecast System, Raytheon and MBDA account for 37 percent (20 percent and 17 percent, respectively) of the air-to-air missile market's value share (some $15.8 billion in sales over the next 15 years between the two out of a total market value of $37.4 billion). Rafael's share is much smaller - about 6.1 percent - but sufficient contracts will be secured to generate revenues of about $2.1 billion over the next 15 years. With its products performing well, Rafael has been focusing its corporate activities on promoting itself abroad. The company is leveraging the success of indigenous systems abroad as part of an ongoing strategy to push beyond borders. Rafael has begun to penetrate other markets, successfully establishing itself in difficult areas such as Chile, India, Singapore, and South Africa. The key to its success in these areas has been its focus on affordability and adaptability rather than bleeding-edge developmental technology. Due to Israel's precarious posture in the Middle East, the development of sophisticated weapons systems has been a priority since the nation's inception. As the country's premier R&D house, Rafael will remain strongly financed for a long time to come, especially as strife continues throughout the region, the COVID-19 pandemic notwithstanding.
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