The Ticker: El Al Posts Fourth-quarter Profit on Lower Fuel Costs

Leumi to sell its 15% stake in Super-Pharm; Mega boosting sales, trimming its losses under trustees; Arms maker Rafael boosted profits 43% in 2015.

An El Al plane on the tarmac at Tel Aviv's Ben-Gurion International Airport.
Daniel Bar-On

El Al posts fourth-quarter profit on lower fuel costs

El Al Airlines swung to a net profit in the fourth quarter, driven by a sharp drop in fuel costs. Israel’s flagship carrier said on Wednesday it earned $12.2 million in the quarter, compared with a $14.8 million loss a year earlier. Revenue dipped 3.4% to $476.3 million. Expenses declined 14.1% as jet fuel in 2015 dropped 32%. The company said it would pay a dividend of $15 million after paying $25 million a few months ago. El Al said it flew more than 5 million passengers last year, up 8% from 2014. Its load factor was steady at 82%-83%. During the fourth quarter and into 2016, El Al was hit by intermittent labor action by some its pilots. The airline has since signed a new wage agreement with all its workers after the previous one expired three years ago. Last October, El Al agreed to buy and lease 15 Boeing 787-8 and 787-9 Dreamliner aircraft in a deal worth more than $2.2 billion. It expects the new planes to reduce operating costs by 20%. (Reuters)

Leumi to sell its 15% stake in Super-Pharm

Leumi Partners, the investment arm of Bank Leumi, is planning to sell its 15% stake in Super-Pharm, Israel’s biggest drug store chain, sometime in the next year for as much as 220 million shekels ($57.4 million), TheMarker has learned. The buyers are likely to be private investors. Leumi bought the stake in 2007 when the chain was valued at about 1 billion and in 2013 Discount Capital Markets – the investing arm of Israel Discount Bank – sold its 10.4% stake at 1.45 billion. If the Leumi sale goes through at the high end of expectations, it would value Super-Pharm at 1.7 billion shekels. In addition, the closely held retailer pays 50-80% of its profits as a dividend every year. Last year, sources said, it generated net profits of between 130 million and 150 million shekels. A Leumi Partners spokesman denied that any decision about selling Super-Pharm has been taken. (Michael Rochvarger and Asa Sasson)

Mega boosting sales, trimming its losses under trustees

The Mega supermarket chain has shown improving turnover since it was put under the management of two court-appointed trustees just over two months ago. The trustees will formally report the food retailer’s financial results next week, but sources said turnover had grown to as much as 200 million shekels ($52.2 million) in the month to March 17 from 188 million in the 30 days before. They said cash flow remained negative but had narrowed to 7 million shekels from 9 million in the first 30 days under trustee management. Moreover, since March 17, daily sales have been running at 50 million shekels a week, a pace that would reduce Mega’s losses to 5 million shekels in the current 30-day period. The trustees, attorneys Ehud Gindes and Gabi Trabelsi, are confident they can get the chain to break even and believe the stores’ strategic locations should enable it to generate especially high operating margins of 29%. Earlier this week, the trustees rejected three bids to buy Mega as being too low. (Yoram Gabison)

Arms maker Rafael boosted profits 43% in 2015

Rafael, the state-owned arms marker, boosted net profit for 2015 by 43% despite worldwide cuts in defense spending. The company said this week that net profit for 2015 reached 459 million shekels ($119.7 million), up from 322 million the year before, as sales rose 11.4% to 7.8 billion shekels, about 60% from exports. However, Rafael’s orders backlog declined slightly to 19.4 billion shekels as new orders fell to 7.7 billion from 10.5 billion in 2014, a year when the company was deluged with orders for its Iron Dome anti-missile system. CEO Yoav Har-Even said the company completed several major projects for Israel’s Defense Ministry last year, most notably the David’s Sling, which the company is developing with America’s Raytheon to intercept tactical ballistic missiles, medium- to long-range rockets and cruise missiles. (Ora Coren)