Spiking oil prices depressed Israel Corporation profits in 2006
The company netted NIS 855 million, a drop of 46% against the NIS 1.6 billion netted in 2005
The sharp climb of oil prices in 2006 weighed heavily on The Israel Corporation last year, depressing results at two key holdings - Zim and ICL.
The Israel Corporation (TASE: ILD) today revealed weak results for the year 2006. The company, which is controlled by Sammy and Idan Ofer, netted NIS 855 million, a drop of 46% against the NIS 1.6 billion netted in 2005.
The Ofers own 55% of The Israel Corporation, while Bank Leumi (TASE: LUMI) owns 18%.Banks are only allowed to own holdings in one conglomerate, and Leumi opted to keep its shares in The Israel Corporation while selling its stakes in Africa Israel (TASE: AFIL) and Migdal Insurance (TASE: MGDL).
The reason for the drop in The Israel Corporation's profits last year lie with two of its holdings, Israel Chemicals (TASE: CHIM) and Zim. But losses at Tower Semiconductors (Nasdaq: TSEM) were smaller, if that's some comfort.
The Israel Corporation owns 100% of Zim, where revenues reached $3 billion in 2006, up from $2.9 billion the year before. But the shipping company's costs rose to $2.7 billion in 2006, compared with $2.56 billion in 2005.
Zim's gross profit sank to $226 million in 2006, compared with $301 million the year before.
Zim netted $80 million in 2006, down from $187 million in 2005.
The main problem at Zim was the spiking price of oil, The Israel Corporation explains.
Also, in 2005, Zim's results were inflated by selling ships, which made it capital gains.
For the fourth quarter, Zim reported netting $9 million, compared with $32 million in the same period of 2005.
Israel Corporation stock from 2005
Another key stockholding at The Israel Corporation is ICL, which today announced netting $374 million in 2006, down from $422 million in 2005, a drop of 11.4%.
Tower Semiconductor cut its loss to $87 million in 2006, from $203 million the year before.
Idan Ofer, chairman, cost The Israel Corporation NIS 5.5 million in 2006, not including his bonus, which is still undergoing approval processes.
Outgoing chief executive Yossi Rosen cost NIS 7.7 million in 2006. The company said it will be giving Rosen an NIS 4.5 million bonus.