Business in Brief: Africa Israel Posts Huge Fourth-quarter Loss

Rami Levy, Victory see profits decline despite rival’s woes | Rafael, India’s Reliance form defense joint venture | Biomed shares lead stock market lower.

Lev Leviev.
Ofer Vaknin

Africa Israel posts huge fourth-quarter loss

Africa Israel Investments, Lev Leviev’s ailing real estate holding company, saw its losses widen sharply Tuesday in the fourth quarter from a year ago as auditors attached a “going concern” warning on the company for the first time since 2010.

Africa had a net loss of 1.58 billion shekels ($412.5 million), widening from 836 million shekels a year earlier as AFI Development, a Russia-focused real estate and investment firm 65%-owned by Africa, posted a 1.96 billion-shekel decline in the value of its assets due to the weak Russian economy and currency.

Africa CEO Avraham Novogrocki said Leviev would not need to inject capital into the business as it negotiates for another debt bailout. “The company has sufficient assets to service the debt,” he said, saying asset write-downs had been accompanied by other units like Africa Residence and Denya Cebus that were generating cash. Shares of Africa Israel, which had issued a profit warning earlier this month, still dropped 6% to 1.80 shekels. (Shelly Appelberg)

David Bachar

Rami Levy, Victory see profits decline despite rival’s woes

Two Israeli food retailers reported declining profits in the fourth quarter even as their rival, Mega, was losing customers and sales. Rami Levy, Israel’s biggest discount supermarket chain, said its net profit plunged 18.4% to 16.6 million shekels ($4.35 million). While revenues were ahead 15.7% to 989 million shekels after it added six stores in the quarter, sales at existing stores were down, which the retailer blamed on a terrorist attack in a Jerusalem-area store that kept shoppers away much of the quarter. Rami Levy shares dropped 2.3% to end the day at 151.40 shekels.

Meanwhile, Victory reported net profit dropped by a third to 3.7 million shekels due to high wage costs and losses on its financial holdings. Sales were ahead 15.8% to 260 million shekels thanks to an addition of 10 stores, including nine bought from Mega. Unlike Rami Levy, Victory’s same-store sales rose 5.1%. Victory shares closed up 1.5% at 33.64 shekels. (Yoram Gabison) 

Rafael, India’s Reliance form defense joint venture

The state-owned Israeli defense contractor Rafael and India’s Reliance Defense said Tuesday they are setting up a joint venture in India to make air-to-air missiles, air defense systems and observation balloons. The companies will address programs valued at $10 billion over the next decade.

Reliance Defense, a unit of Reliance Infrastructure, will hold 51% of the joint venture and Rafael, one of Israel’s largest defense firms, will hold the rest. The agreement comes amid burgeoning bilateral defense ties in which Rafael has provided the Indian Air Force surveillance, reconnaissance, communication and intelligence equipment. Earlier this month India’s Cabinet Committee on Security approved the purchase of two more Phalcon Airborne Early Warning and Control Systems from Israel. (Ora Coren)

Biomed shares lead stock market lower

Biomed shares led the Tel Aviv Stock Exchange lower Tuesday even as energy stocks recovered from a pummeling they took the day before. The benchmark TA-25 index ended down 0.75% at 1,463.90 points, while the TA-100 dropped to 1,257.01 on turnover of 1.24 billion shekels ($320 million). Mannkind led biomed shares lower, tumbling 10.1% to 6.53. Opko Health lost 7.3% to 41 shekels and Compugen fell 5.6% to 20.57.

Azrieli Group led the most actives on a 4.3% decline to close at 148.20 shekels after the nonprofit Azrieli Fund offloaded a 2% stake it held in the property company for an amount that could reach 400 million shekels. The fund acted to increase the company’s float and meet the minimum required to stay in the TA-25. Cellcom Israel rose 4.4% to 27.32 shekels, marking a second day of strong gains ahead of an Antitrust Authority ruling its proposed merger with Golan Telecom.

Energy shares rebounded two days after the High Court struck down a key part of the gas framework. The oil and gas index rose 1.65% to 869.30 points. (Uri Tomer)