After tough 2011, Electra Consumer rebounds as investments bear fruit
Revenues grow 8% to NIS 509 million as net income gains 6% to NIS 15m.
After a disappointing performance in 2011 and a 30% decline in its share price, Electra Consumer Products reported on Tuesday an improvement in its results for the first quarter of 2012.
Revenues grew 8% from a year earlier to NIS 509 million, boosted by the timing of the Passover holiday, which boosted first-quarter shopping, and investments undertaken last year.
Electra Consumer, a member of Gershon Salkind's Elco Holdings' group, operates mainly in three fields: consumer electrical appliances under the Electra, Elco, and Electra Bar brand names; retailing, including the Makhsanei Hashmal, Shekem Electric, and Sensor electrical appliance store chains, along with the recently acquired Ace Hardware do-it-yourself chain; and computers and communication, which includes marketing Sony cellphones and Lenovo, Acer, Dell, and other PC brand names.
In 2011 the company invested heavily in expanding its activities, including Electra Bar, launching the Whirlpool brand, Daikin operations, and the jointly-operated commercial ynetshops portal.
"Today we are reaping the fruits of our 2011 investments," said CEO Yaki Vadmani.
The expansion and launch of new products raised operating income by 6% over the equivalent period last year to NIS 22.1 million. Most of the increase was attributable to the retail sector, which contributed NIS 8.1 million - 48% higher than in the first quarter of 2011.
The bulk of operating profits still came from consumer electrical appliances: NIS 14.1 million, a 5% increase over the last year's equivalent period, stemming largely from growth in air conditioner sales and imported goods.
Electra Consumer Products' computers and communication division, which includes the Electra Computers store chain, was its weak link last quarter with sales dropping 7% to NIS 45.1 million and operating income being slashed in half from the parallel quarter to just NIS 730,000.
"The improvement in profitability is the direct result of efficiency measures taken at Shekem Electric and Makhsanei Hashmal," said Vadmani. "At Electra Computers we are striving to lead the market, which is suffering from declining sales and customer attrition."
On its bottom line the company reported a 6% increase in net income to shareholders for the quarter, to NIS 15.3 million. Cash flow from operating activities in the three-month period generated NIS 38 million, compared with a NIS 53 million deficit recorded in the same period last year.
The results of the Ace chain of 34 stores purchased for NIS 45 million by Electra Consumer Products in March weren't included in the first quarter statements, but are expected to yield "great significant value in the long term," said Vadmani.
"We bought part of the Ace operations, and in the framework of restructuring we took on its best branches," said the CEO. "We dug deep into headquarters expenses and instituted significant management cost reductions. We are always looking for additional purchase opportunities."