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Petrochemicals fizzles By Nathan Sheva Heavy financing costs, mainly due to the depreciation of the dollar against the shekel, as well as rising raw materials prices dragged Israel Petrochemical Enterprises' bottom line deep into the red, with first quarter losses of NIS 79.8 million, versus NIS 28.5 million in profits for the first quarter of 2007. IPE, which is controlled by David Federman, Jacob Gottenstein, Alex Passal and Leonid Nevzlin, makes ethylene, polyethylene and polypropylene via its subsidiary Carmel Olefins (50%). These products are the main raw materials for the plastics industry. IPE's revenues increased by 25%, to NIS 390 million, in the first quarter of 2008 thanks to greater sales volume and added production output from new facilities. Despite higher revenues, however, gross profits were slashed by 55% to NIS 20.4 million, representing just 5.1% of sales, compared to 14.2% for the parallel. The company's profits suffered mainly from more expensive (petroleum-based) raw materials, higher overheads and increased wage costs. Advertisement Operating profits were down 10% from the parallel and would have been recorded as losses of NIS 5 million were it not for NIS 30.7 million in revenues stemming from profits generated by IPE subsidiary Scailex from the purchase of Glencore International's stake in Petroleum Capital Holdings (PCH), via which IPE owns a share of Oil Refineries. Net financing costs totaled NIS 116 million, compared to just NIS 2.4 million in the first quarter of 2007. An additional accounting loss of NIS 85 million was reported due to the conversion of the company's monetary obligations, which are recorded in dollars but translated into shekels. Carmel Olefins' financing costs also increased due to higher payments on long-term loans and corporate bonds issued in March 2007. IPE also announced progress in negotiations for Oil Refineries' purchase of IPE's 50% stake in Olefins, in an exchange of shares that will give IPE at least 20% of Oil Refineries' share equity. Prior to the conclusion of this deal, Oil Refineries will disburse NIS 200 million in dividends. Bookmark to del.icio.us   Jet error Israeli warplanes come close to shooting down Tony Blair's plane. Rehab (live) Report: Singer Amy Winehouse is to undergo drug rehab in Israel.

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