News Column

Oil Refineries results up, Paz profit soars

August 22, 2014

By Aviv Levy, Globes, Tel Aviv, Israel

Aug. 22--Energy giants Paz Oil Company Ltd. (TASE:PZOL) and Oil Refineries Ltd. (TASE:ORL) ended the second quarter on a positive note, following an upturn in the refining business. Oil Refineries, which owns facilities in Haifa, followed its positive first quarter results with a $4 million net profit in the second quarter, about the same as in the first quarter, and in contrast to a $38 million loss in the second quarter of 2013. Oil Refineries sank into a financial crisis last year, following 10 consecutive quarters of heavy losses.

The share of Oil Refineries, controlled by Israel Corporation (TASE: ILCO) and Israel Petrochemical Enterprises Ltd. (TASE:PTCH), responded to the report by jumping 3-4% on a fairly large trading volume, after losing a quarter of its value over the past year. The company's market cap is now NIS 3.4 billion. The company's bond series, which traded at a double-digit yield only a few months, due to investors' concern about its ability to meet its obligations, is now trading at a stable 4% yield.

Oil Refineries CEO Arik Yaair said today, "The business environment we work in during the second quarter was challenging. Nevertheless, the company's operating results continued to improve. This improvement resulted mainly from better refining margins, the contribution of polymers, implementation of a streamlining plan that yielded the desired results, and improved availability of facilities in the group's plants."

Yaari added, "Refining margins strengthened significantly. If this trend continues, we anticipate a positive effect on our financial results."

Oil Refineries's second quarter revenue remained unchanged at almost NIS 2.5 billion.

Paz: stability in retail sales and trade

Paz, controlled by Zadik Bino, managed to improve its profitability, and its adjusted quarterly net profit soared 122% to NIS 80 million. Its adjusted first half profit was up 51% to NIS 133 million.

In the breakdown by activity segments, Paz's refining business stood out in a positive way with a NIS 25 million adjusted profit, compared with a loss of about the same size in the second quarter last year. The Ashdod oil refinery made a NIS 19 million net profit, compared with a NIS 20 million loss in the corresponding period in 2013.

The retail and commerce division, which includes a chain of filling stations and the Yellow chain of convenience stores, was stable. Adjusted operating profit was NIS 101 million in the first quarter and NIS 186 million in the first half of 2014.


(c)2014 the Globes (Tel Aviv, Israel)

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Source: Globes (Tel Aviv)

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