Delek Group Announces Consolidated Results for the Third Quarter and First Nine Months of 2008
DLEKG.TA) (hereinafter: “Delek Group” or “The Group”) announced today its
results for the three and nine month period ending
full financial statements will be available in English on Delek Group’s
website from Monday 1st December at: http://www.delek-group.com.
Nine Month Highlights
- Consolidated revenues up 41% year over year reaching NIS
40.6 billion
- NIS 2.1 billion profit from operating income
- Automotive, Energy and Infrastructure continue to show solid
performance
- Net results primarily impacted by overall macroeconomic
crisis affecting both real-estate sectors as well as insurance and
financial service holdings; subsequently reported net loss of NIS
371 million
Group revenues for the first nine months of 2008 was
growth of 41% compared with
Revenues for the third quarter of 2008 increased 27% reaching
billion
increase in revenues is due to an increase in revenues from the sale of fuels
in
Net income from operating activities for the nine months totaled
billion
in the nine months 2007.
Results for the first nine months were negatively impacted by the
macroeconomic environment, affecting valuations of the Company’s holdings in
the real estate sector, resulting primarily in the impairment of assets and
the fair value adjustments of financial derivatives; as well as the slowdown
in the global and Israeli capital markets which impacted the Company’s
insurance and financial services holdings. Furthermore, the Company’s US
based insurance holding was also affected by the three hurricanes which hit
certain regions insured by Republic, during the summer months. This was
partially offset by the strong performance of the automotive, energy and
infrastructure sectors.
As a result of the above noted factors, the Company reported a net loss
for the nine months of 2008 totaling
profit of
third quarter of 2008 totaled
the result of the factors outlined above.
Financial expenses were significantly increased in the nine months,
amounting to
corresponding period last year. This was primarily as a result of the
increased credit raised to finance the Company’s growth strategy, including
RoadChef and the European Fuel Operations. In addition, the consolidation of
the property companies in Delek Real Estate after the DGRE offering also
increased the debt balance. Financial expenses were also impacted by the rise
in the Israeli Consumer Price Index which total 5.0% for the nine months,
compared to 2.8% in the nine months last year.
Mr.
complex times, our globally diverse portfolio on four continents serves as an
anchor, as it covers four different sectors meeting different global needs -
automotive retail, energy and infrastructure, as well as real estate and
insurance. We are clearly focusing on carefully managing our balance sheet
with maximum emphasis on maintaining a positive cash flow. These principals
are a driving factor at all levels of the group, and we are working closely
with each of our companies to ensure that this same liquidity principle is
being diligently followed throughout the Group.”
Continued Mr. Bartfeld, “The macroeconomic environment, and its impact on
both our real estate and Israeli insurance holdings was a primary factor this
quarter drawing us to present a net loss. This was however, partially offset
by the sound performance of our automotive, energy and infrastructure
holdings. A large component of our real estate losses this quarter resulted
from impairments on our real estate assets, goodwill and financial
derivatives, due to the macro environment. This was a non-cash charge and
resulted from an accounting impairment. Excluding these impairments our
results would have been at the breakeven level. As highlighted, our core
holdings of energy and infrastructure generated sound performance and after
the reporting period, our infrastructure subsidiary signed an MOU with Tnuva
to build an additional independent power station. Another positive
development in our energy sector is our initiation during
drilling for natural gas in the Mediterranean Sea near
Nobel, our US partner in the Yam Tethys project.”
Concluded Mr. Bartfeld, “Looking ahead, our professional management team,
with previous experience in navigating cyclical markets with an average
tenure of 15 years managing our companies, as well as our globally diverse
and premier portfolio will offer us the necessary tools to weather the
current downturn. We also have a solid cash position and a strong ability to
service our debt, with a relatively lengthy average maturity. In parallel, we
continue to closely monitor developments, refining our strategy as
circumstances require, prioritizing investments, with a key focus on
continually building and maximizing shareholder value.”
Main Business Highlights for the Third quarter of 2008
Contribution of Principal Operations to Net Profit* (NIS millions)
FY Q1-Q3 Q1-Q3 Q3 Q3
2007 2008
2007 2007 2008
US Fuel Sector Operations 353 371 73 102 27
Israeli Fuel Sector Operations 138 75 85 40 31
Capital Gains on Sale of Amisragas2 86 86 - 86 -
Delek Europe1 31 13 63 13 10
Oil and Gas Exploration 90 70 59 36 40
Oil Exploration Expenses (58) (58) (46) - (7)
Automotive Operations 245 186 300 59 110
Real Estate Operations 210 103 (440) 13 (428)
Insurance and Finance Operations 178 197 (237) 33 (198)
Reduction in value of financial - - (128) - (95)
derivatives
Capital Gains & Others 34 58 (100) 102 (102)
Net Income 1,307 1,101 (371) 484 (612)
* This table has been extracted from Delek Group’s Third Quarter 2008
Directors Report. Please review the full report available on the Group’s
website www.delek-group.com to view the notes for each of the items above.
Please note that 2007 results are restated according to IFRS accounting
principles.
1 Delek’s European activities started at the beginning of
2 39% of Amisragas was sold by Delek – the Israel Fuel Company during the
third quarter of 2007.
Energy
Delek US (Delek Group holds 73% end-Q3 2008): Net income for the first
nine months of 2008 was
same period last year. In the third quarter 2008, Delek US’ results were
positively impacted by an increase in the 5-3-2 Gulf Coast crack spread
compared to the first half of 2008, a significant decline in wholesale fuel
prices in August and September which contributed to higher fuel margins, in
addition to continued ethanol blending at the retail and refining segments.
However, the average overall crack spread for the nine month period was
significantly lower than the same period last year.
On
which resulted in an employee fatality. Activity at the refinery has
subsequently ceased, pending an investigation of the circumstances which led
to the event and to assess the extent of damages. According to preliminary
tests, the critical activities at the refinery were not damaged, and nor was
the terminal at the refinery. Thus, sales of the remaining inventory to
customers will continue.
In accordance with the Company’s existing risk management program, Delek
US currently carries
and business interruption. Delek US has a
damage insurance. In addition, Delek US’ business interruption insurance
carries a 45-day waiting period.
Delek – the Israel Fuel Company Ltd. (TASE: DLKIS; Delek Group holds 89%
end-Q3 2008): Net income for the first nine months of 2008 was
million
quarter of last year, Delek Israel had a non-recurring capital gain of
approximately
gross and operating profit were higher in the reporting period and were
driven by improved operating efficiencies, an increase in volume of sales, an
increase in the contribution of the convenience store chain and the inclusion
of the production and storage operations acquired
income was negatively affected due to increased financing expenses and
inventory losses, as compared with that of last year.
Delek Europe. Net income for the first nine months of 2008 was
million
established in
the Benelux region. For comparison, in the months from August to end of
margins in the quarter, compared with those of previous quarters, which
affected its net income. This was primarily due the sharp fall in global oil
prices which lowered the value of its inventory.
The Oil and Gas Exploration, and Gas Production sector, generated a net
income of
income of
natural gas from the Yam Tethys reservoir, off the coast of
by 40% to
Following the end of the reporting period the platform for the new drilling
site, Tamar, arrived at its location near the Northern coast of
began drilling for natural gas in
interest in the Tamar project.
Infrastructure
The Group continues to develop its strategy in the infrastructure area
with a focus on water desalination and power plant construction. In May, IDE,
the Company’s water desalination subsidiary which is 50% (indirectly) held by
Delek Group, won a tender to supply three desalination plants for an Asian
customer for approximately
contract to establish a desalination plant for an industrial client in
In April, IPP, the Company’s power plant subsidiary which is 100% held
(indirectly) by Delek Group, entered into an agreement to supply electricity
to Nilit Ltd., for approximately
2011 with an option to extend for a further six years. Additionally,
following the balance sheet closing date, in mid-November, IPP signed an
agreement with Tnuva for the establishment and operation of a private
cogeneration plant, generating 50 megawatts of electricity, as well as steam
and thermal oil for Tnuva, in the area surrounding Tnuva.
Insurance and Financial Services
The activities of this segment are primarily conducted through Delek
Capital, as well as two insurance companies; Israeli insurance company,
Phoenix Holdings Ltd. (TASE: PHOE), and general US insurer, Republic
Companies, Inc. held through wholly-owned Delek Finance US Inc. The insurance
and financial services sector contributed a loss of
Group’s net income in the first nine months of 2008, compared to a net income
of
insurer
markets, in the third quarter. During the third quarter three major
hurricanes (Dolly, Gustav and Ike) hit the region of
leading to a significant impact on the results of the US insurer Republic
based in the region. These events were the main cause for the loss to
Republic in the third quarter of approximately
Real Estate Operations
Delek Real Estate (TASE: DLKR; Delek Group holds 69% end-Q3): In the
reporting period, Delek Group purchased an additional 17% of the outstanding
share capital of Delek Real Estate for
net loss for the first nine months of 2008 reached
with net profit of
factors contributed to the net loss mainly a decrease in the value of the
assets due to negative market conditions in Real Estate globally, decrease in
value of financial derivatives, the increase in the Consumer Price Index in
Subsequent to the end of the current reporting date, the Board of
Directors passed a resolution according to which the Company will distribute
all or most of Delek real Estate’s shares held by it to the Company’s
shareholders. This remains subject to obtaining the required approvals.
Automotive Operations
Delek Automotive Systems Ltd. (TASE: DLEA; Delek Group holds 55% end-Q3):
Delek Automotive Systems’ net income for the first nine months of 2008
totalled
same period last year. The increase in net income was driven mainly by the
strong growth in sales of new cars in
Automotive maintains a 23% market share in the Israeli automobile market
through the exclusive import and distribution of the Mazda and Ford brands.
Conference Call Details
The Company will be hosting a conference call in English on
December 1st, 2008
the call, CEO
Relations,
available to answer your questions.
To participate, please call one of the following teleconferencing
numbers: US: 1-866-345-5855, UK: 0-800-404-8418 and
About The Delek Group
The Delek Group is one of the leading and most prominent and dynamic
investment groups in
following three major subsidiaries:
Delek Petroleum, with its two subsidiaries: Delek Israel, a gasoline and
lubricants distributor in
and convenience stores and an oil refinery in
Delek Investments and Properties, a holding company with subsidiaries in
the energy, infrastructure, automotive, finance and media sectors.
Delek Real Estate, through its subsidiaries Dankner and Delek Belron
Investments, owns and manages prime global real-estate investments.
Contact
Dalia Black
Head of Investor Relations
Delek Group
Tel: +972-9-863-8444
Email: black_d@delek.co.il
Kenny Green / Ehud Helft
International Investor Relations
GK Investor Relations
Tel: (US) +1-646-201-9246
E-mail: info@gkir.com
SOURCE Delek Group Lts