Rafael CEO on payment delays from the state: "We receive empathy from the Treasury, but no solutions"
Rafael CEO Yoav Turgeman is criticizing the Ministry of Finance over state payment delays to defense firms. The Ministry of Defense currently owes 15.5 billion shekels to major defense contractors.
Rafael CEO Yoav Turgeman is harshly criticizing the Ministry of Finance following delays in state payments to defense companies. Over the past year, a debt of approximately 15.5 billion shekels has accumulated in the Ministry of Defense to Rafael, Israel Aerospace Industries (IAI), and Elbit Systems for contracts and orders that have already been approved, of which about 7 billion shekels are owed to Rafael.
"The one representing the state budget is the Ministry of Finance, which previously approved the signing of contracts with us but is not paying them, and in my opinion, this is contrary to the agreement and contrary to the law," Turgeman said. "We have hundreds of suppliers all over the country, most of them from the North, and we make every effort to pay them on time, even though I am not receiving money from the state. Meanwhile, we are receiving empathy from the Ministry of Finance, but no solutions. This is an issue that requires an urgent solution, and it would be appropriate for the Minister of Finance to intervene as well. The State of Israel is our largest client, and when it does not pay us, we are forced to take out loans."
Turgeman also said that despite the ongoing debt, government ministries are discussing compensation mechanisms with defense industries, which also include financing the debt in the amount of about one billion shekels per year.
Meanwhile, the continued strong demand for weapons from the IDF and many other armies around the world continues to push the activity of the government-owned company Rafael, which concludes the second quarter of 2026 with sales of approximately 5.68 billion shekels, an increase of 20% compared to sales of about 4.7 billion shekels in the same quarter last year. The volume of new orders that entered Rafael during the quarter amounted to 6.92 billion shekels, an increase of 39% compared to the same period. Its order backlog at the end of June amounted to 75.8 billion shekels, compared to an order backlog of 65.8 billion shekels in the same period last year, reflecting an increase of 15%.
In the first half of the year, Rafael's sales amounted to about 10.6 billion shekels, an increase of 13.6% compared to sales of 9.36 billion shekels in the first half of 2025. New orders amounted to more than 15 billion shekels, a jump of 33% compared to orders received in the same period, which amounted to about 11.3 billion shekels. The data also shows that Rafael's net profit for the half-year amounted to 663 million shekels, an increase of about 8% compared to a net profit of 612 million shekels presented in the same half-year. A calculation based on the data for the half-year and the first quarter shows that the net profit in the second quarter alone amounted to about 329 million shekels, compared to about 340 million shekels in the second quarter of 2025. Thus, the net profit margin from sales in the quarter decreased from about 7.2% last year to about 5.8% this year.
Rafael attributes the continued growth in its activity to the persistence of high demand for systems it develops and manufactures for the IDF and the defense establishment and for its clients around the world. Among the prominent deals it recently reported is the giant deal with Romania, under which it will supply it with the Spyder air defense system for a total amount of about 2 billion euros. The deal is considered one of the largest defense deals in Israel's history. The Spyder deal between Rafael and the Romanian Ministry of Defense was signed about two months ago, and the company is expected to supply the air defense systems over the next three years. These supplies include a large number of air defense batteries of this type, but the company did not specify the quantity. The deal includes launchers, interceptor missiles, radar systems, and training and logistical support systems for the forces that will operate the defense systems.
Tomorrow, another giant deal will be signed in Israel, amounting to about 3.6 billion euros, for the supply of air defense systems to Greece as part of its "Achilles Shield" procurement program. In this program, Israeli defense companies, led by IAI and Rafael, will supply Greece with air defense systems that will form the basis of its multi-layered air defense array.
The business results presented by Rafael for the second quarter and the first half of the year join the strong results published in recent weeks by the other two major defense companies as well. Elbit Systems finished the second quarter with revenues of 2.29 billion dollars, an increase of 16% compared to the same quarter, and a net profit of 173.6 million dollars, a jump of 38%. Its order backlog reached a record of 32 billion dollars. Israel Aerospace Industries presented sales in the quarter of about 2.20 billion dollars, an increase of 35%, and a net profit of 229 million dollars, a jump of 47%. IAI's order backlog reached a record of 35 billion dollars. This is happening in parallel with its transition to a negative cash flow of hundreds of millions of dollars, partly against the backdrop of delays in Ministry of Defense payments.
