Delek Group Announces Consolidated Results for the Third Quarter and First Nine Months of 2010By Delek Group Ltd, PRNE
Monday, November 29, 2010
Net Income in the Nine Month Period Reaches NIS 302 Million
TEL AVIV, Israel, November 30, 2010 - Delek Group Ltd. (TASE: DLEKG.TA , OTCQX: DGRLY) (hereinafter:
"Delek Group" or "The Group") reported its results for the three and
nine-month period ended September 30, 2010. The full financial statements are
available on Delek Group's website at: www.delek-group.com.
Financial Highlights of the Nine Month Period
- Revenues grew year-over-year 12% to NIS 31.7 billion; - Group operating profit reaches NIS 1.1 billion growing 9% year-over-year; - Net income of NIS 302 million; - Third quarter dividend issued amounted to NIS 500 million - Strong improvement in profitability in Groups' core businesses including natural gas sales, European gas station business, insurance sector and automotive sector;
First Nine Months 2010 Results
Group revenues for the first nine months of 2010 totaled NIS
31.7 billion, a growth of approximately 12% compared with NIS 28.4 billion in
the same period in 2009. Group revenues in the third quarter of 2010 amounted
to NIS 12.2 billion, an increase of 16% compared with NIS 10.5 billion in the
second quarter of 2009. The increase in nine-month revenues was primarily as
a result of increased sales at the refinery in Tyler, Texas compared with
last year at which time it was closed following a fire, strong growth in
revenues received from the insurance holdings, and an increased in sales of
natural gas compared with that of last year.
Operating profit for the first nine months of 2010 totaled NIS
1.1 billion, a 9% increase over NIS 1.0 billion in the same period in 2009.
Operating profit in the third quarter of 2010 amounted to NIS 295 million, a
26% increase compared with NIS 238 million in the third quarter of 2009. The
improvement in the operating profit was due to increases in operating profit
at the European gas station business, Oil and Gas exploration and production,
and the Insurance and Finance operations.
Net income for the first nine months of 2010 was NIS 302
million, compared with the NIS 440 million in the same period in 2009. Net
income in the third quarter was NIS 33 million, compared with NIS 60 million
reported in the third quarter of 2009. The reduction is primarily due to
increased financial expenses and in addition to a net loss at Delek US.
Mr. Asaf Bartfeld, CEO of Delek Group commented, "Following the recent sale
of a portion of Delek Automotive as well as the income gained from our recent
issue of bonds, we are now in a very strong financial situation with a solid
balance sheet. We have excellent liquidity with NIS 3.5 billion in liquid
assets on the balance sheet. In addition, as a result of successful
restructuring, the majority of assets pledged against bank debt have been
released, demonstrating the Company's improved financial flexibility."
Continued Mr. Bartfeld, "We have seen a solid improvement in
the results of our Oil and Gas Exploration and Production sector. We are also
excited with the initial results of the drilling at Leviathan which showed
natural gas bearing sands and we await further results of the logging in the
coming weeks. Our European retail business is much improved compared with
last year, operating at a higher revenue level and lower cost, and we hope to
enjoy the synergies with our recently purchased retail fuel and convenience
store business from BP in France. Finally, we also recorded strong
performance in our Financial and Insurance activities. We look forward to
sharing the fruits of this success with our shareholders and will be
distributing half a billion shekels as a dividend for the third quarter."
Main Business Highlights
Contribution of Principal Operations to Net Income* (NIS
Q3 Q3 Q1-Q3 Q1-Q3 FY 2010 2009 2010 2009 2009 US Fuel Sector Operations (30) (14) (32) 81 27 Israeli Fuel Sector Operations 16 9 50 70 82 Delek Europe 13 (2) 82 42 59 Oil and Gas Exploration 43 52 95 20 23 Insurance and Finance Operations 59 23 181 111 181 Automotive Operations 60 65 190 172 250 Capital Gains & Others (128) (73) (264) (56) 242 Net Income 33 60 302 440 864
* Parts of the above table have been extracted from Delek Group's Third
Quarter 2010 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.
Energy & Infrastructure
The Oil and Gas Exploration, and Gas Production sector. Oil
and gas exploration activities contributed NIS 418 million in revenue for the
first nine months of 2010, compared with revenue of NIS 325 million in the
same period in 2009. The 29% increase was primarily as a result of the
changed conditions and an increase in sale price, based on agreements signed
with the Israel Electric Company and Israel Chemicals at the end of December
2009. The amount of gas supplied in the 9 month period, at 2.4 BCM, was
higher than that supplied in the same period last year, at 2.2 BCM. Net
income for the first nine months of 2010 was NIS 95 million compared to a net
income of 14 million in the same period of 2009.
Summarising the recent oil exploration activities off the
coast of Israel, in August 2010, the budget of $150 million for the drilling
of the Leviathan prospect was approved. In October 2010, the Sedco Express
drilling rig arrived at the site at about 135 kilometers west of Haifa and
began drilling. Drilling is planned at three targets and to a final depth of
7,200 meters (including water depth) and is expected to take approximately
five months. At the end of November it was reported that from the initial
analysis of the information gathered while drilling, it seemed that the
primary target has natural gas bearing sands. Drilling operations are planned
to continue with additional tests to be performed, including electrical logs.
Delek US (NYSE: DK; Delek Group holds 72.6% end-Q3 2010):
Revenues in the first nine months of 2010 were NIS 10.4 billion compared with
NIS 7.2 billion in the first nine months of 2009, an increase of 44%. Net
loss in the first nine months of 2010 was NIS 45 million compared with a net
income of NIS 113 million in the same period in 2009.
During the third quarter 2010, the Company conducted unplanned
maintenance on several process units at the Tyler refinery. The crude unit at
Tyler was offline for approximately 14 days during late July and early
August, resulting in lower throughputs and, subsequently, lower sales volumes
at the refinery in the period, when compared to the third quarter 2009.
Gulf Coast refining economics improved during the third
quarter 2010, as evidenced by a nearly 17 percent increase in the benchmark
Gulf Coast 5-3-2 crack spread, when compared to the year-ago period. The Gulf
Coast 5-3-2 crack spread was $7.45 per barrel in the third quarter 2010,
versus $6.38 in the third quarter 2009
In the retail segment in the quarter, same-store merchandise
sales increased 6.3 percent in the third quarter 2010, versus an increase of
1.8 percent in the third quarter 2009. The improvement in same-store
merchandise sales is attributable to several key factors, including
successful promotional efforts within the dairy, grocery and beer categories,
consumer acceptance of recently introduced private label products, as well as
continued growth in fresh food sales.
Delek - the Israel Fuel Company Ltd. (TASE: DLKIS.TA; Delek
Group holds 77% end-Q3 2010): Revenues in the first nine months of 2010 were
NIS 3.8 billion compared with 3.1 billion in the first nine months of last
year. This increase was due primarily to the increase in fuel prices, an
increase in real terms of the quantities of gasoline sold to commercial
enterprises, an increase in sales at the Menta convenience stores.
Net income in the first nine months of 2010 amounted to NIS 72
million compared with a net income of NIS 80 million in the same period in
Delek Europe. Delek is an operator of 850 gas stations across
the Benelux region. Revenues in the first nine months of 2010 were EUR1.8
billion compared with EUR1.4 billion in the same period last year. Net income
in the first nine months of 2010 was EUR19 million, compared with a net
income of EUR8 million in the same period in 2009. The improvements were
driven by an improvement in the gross profitability in the gasoline sector, a
reduction in expenses and growth in the convenience store sector.
On October 1, 2010, Delek Europe completed the acquisition of
BP's retail fuels and convenience business in France, including 416 petrol
stations and its interests in 3 terminals was approved by the European
Commission. The cost amounted to about Euro 175 million (including the
expenses related to the deal, but subject to working capital adjustments)
Insurance and Financial Services
The activities of this segment are primarily conducted through
two insurance companies; Israeli insurance company, Phoenix Holdings Ltd.
(TASE: PHOE), and general US insurer, Republic Companies, Inc. that is an
indirectly wholly owned subsidiary.
The insurance and financial services sector contributed NIS
181 million to the Group's net income in the first nine months of the year, a
growth of 63%, compared to a net income of NIS 111 million in the same period
Phoenix reported a sharp rise in net profit amounting to NIS
239 million in the first nine months months of the year, compared to NIS 136
million last year. The results were improved over those of last year due to
the significant improvement in the capital market environment globally and in
Israel in the past year.
Republic Companies reported a strong improvement in net profit
amounting US$12 million in the first nine months of the year, compared with
US$1 million, in the same period last year.
Delek Automotive Systems Ltd. (TASE: DLEA.TA; Delek Group
holds 55% end-Q3 2010): Delek Automotive is the exclusive distributor of
Mazda and Ford in Israel. Revenues in the first nine months of 2010 reached
NIS 3.4 billion at around the same level in the same period of 2009. Delek
Automotive sold 30,627 cars in the first nine months of 2010 compared with
31,461 in the same period last year, and currently holds a market share of
approximately 19%. Net income at Delek Automotive in the first nine months of
2010 reached NIS 313 million compared to a net income of NIS 305 million in
the same period in 2009.
In October, a Delek Investments, a wholly-owned subsidiary of
the Delek Group, sold 22% of the issued share capital of Delek Automotive to
Gil Agmon, CEO of Delek Automotives for approximately NIS 1 billion, based on
the price of NIS 50 per share. With the completion of this transaction, Gil
Agmon holds 38% of Delek Automotive while Delek Investments directly holds
33% of Delek Automotive, and Delek Investments has thus ceased its exclusive
control of Delek Automotive. Following this sale, Delek Group will record a
capital gain of approximately NIS 2 billion in the fourth quarter of 2010.
On November 30, 2010, the Board of Directors of Delek Group
declared a cash dividend distribution for third quarter of 2010 in the amount
of approximately NIS 500 million (approximately NIS 43.95 per share) to the
shareholders on record as of December 8, 2010. The dividend will be paid on
December 20, 2010.
Conference Call Details
The Company will be hosting a conference call in English on
Wednesday, December 1, 2010 at 9am ET, 2pm UK time, 4pm Israel time. On the
call, CEO Asaf Bartfeld, CFO Barak Mashraki and VP, Investor Relations, Dalia
Black, will review and discuss the results, and will be available to answer
To participate, please call one of the following
teleconferencing numbers: US: 1-888-407-2553, UK: 0-800-917-9141, Israel:
About The Delek Group
Delek Group is the leading energy & infrastructure group based
out of Israel with investments in upstream & downstream energy, water
desalination and power plants globally. In addition, Delek is the number one
importer & distributor of vehicles in Israel and owns insurance assets in
Israel and the US. Earlier this year, Delek Group, through its subsidiaries,
discovered significant quantities of high quality natural gas off the coast
of Israel. Delek Group sales reached over 43 billion Israeli shekel in 2009.
For more information on Delek Group please visit
Contact Dalia Black Vice President, Investor Relations Delek Group Tel: +972-9-863-8444 Email: email@example.com Kenny Green International Investor Relations CCG Investor Relations Tel: (US) +1-646-201-9246 E-mail: firstname.lastname@example.org
Contact: Dalia Black, Vice President, Investor Relations, Delek Group, Tel: +972-9-863-8444, Email: black_d at delek.co.il. Kenny Green International Investor, Relations CCG Investor Relations Tel: (US), +1-646-201-9246 E-mail:, delek-group-ir at ccgisrael.com
Tags: Delek Group Ltd, Israel, November 30, Tel aviv