Israel Corporation Loss Widens Amid Troubles at Chemicals, Shipping Units

Idan Ofer’s holding company finished final three months of 2013 with $406 million loss.

The Dead Sea Works potash fertilizer manufacturing plant belongs to Israel Chemicals.
Bloomberg

Israel Corporation, Idan Ofer’s holding company, saw its loss balloon in the final quarter of last year as its Zim Intergrated Shipping Service unit posted a wider loss and profit declined as its Israel Chemicals unit.

Israel Corp said Thursday its loss reached $406 million, compared with a $306 million loss a year earlier.

Zim lost $282 million in the last three months of 2013, widening from a $238 million loss the same time in 2012 as difficult economic conditions trimmed revenues by 9.5% to $888 million. Excluding extraordinary items, Zim’s loss was $113 million.

Shares of Israel Corporation were down 1.7% to 1.995 shekels ($572) in Tel Aviv Stock Exchange trading on Thursday.

Zim’s gross loss narrowed 40% to $86 million but its financial costs jumped 118% to $146 million, pushing the shipping company into the red.

The world’s 17th largest shipping company, Zim is in the midst of a financial restructuring in which most of its creditors will swap for equity. The deal will slash Zim’s debt by $1-$1.5 billion from about $3 billion, but leave Israel Corporation with just a one-third stake in the company.

Zim also said it is in advanced negotiations with Israel’s government regarding the cancellation of the state’s “golden share,” while maintaining the government’s interests in a way acceptable to the Defense Ministry.

Israel Chemicals ICL, the world’s sixth-largest potash producer and traditionally a profit center for Israel Corporation, saw its fourth-quarter earnings drop 21% from a year earlier to $195 million, excluding one-off items.

Israel Corporation said last week it was considering selling up to 7% of ICL as part of a financing deal and listing the shares for trading on the New York Stock Exchange. But for now, ICL is struggling with the sharp decline in global potash prices.

Other problem areas for the holding company include Oil Refineries Limited, Israel’s biggest maker of petroleum products. Apart from losses at ORL, Israel Corporation wrote down $58 million on the value of its 37% stake in the company during the quarter.

Qoros, the Chinese carmaker in which Israel Corporation holds a 50% stake, lost $144 million in the final three months of 2013, widening from $55 million a year earlier. Qoros began selling its first cars commercially last December and reported just $2.1 million in sales in the remaining days of the year.

Among the only bright spots in the quarter report was IC Power, which produces electricity at a Mishor Rotem plant in Israel and in Latin America. It widened profits to $20 million in the quarter from $19 milion a year earlier. Revenues rose 66% to $266 million as the Mishor Rotem plant began operations and its facility in Peru operated for the first time at full capacity.