Business in Brief: Tel Aviv Market Puts Aside Worries Over Gaza and Italy, Posts Small Gains

As expected, Mizrahi-Union merger nixed by Antitrust Authority; Cellcom Israel profits slashed, despite gains for landline service; Pressured by costs, Super-Sol posts modest first-quarter profit gain

Visitors standing in front of a stock market ticker screen at the Tel Aviv Stock Exchange (TASE).
Bloomberg

As expected, Mizrahi-Union merger nixed by Antitrust Authority

It’s official: The proposed 1.5 billion shekel ($420 million) merger between Mizrahi Tefahot Bank and Union Bank of Israel was rejected Wednesday by the Israel Antitrust Authority. “The Israeli banking system is highly concentrated and suffers competitive problems, one of which is evidenced by the very high barrier to entry,” the authority said. “For decades no new bank has been established in Israel and the number of banks has declined. Today only six banking groups offer deposit accounts and related services to non-business customers.” Officials had signaled in the last few weeks that it looked askance at the tie-up between Israel’s third- and sixth-largest lenders, but the formal rejection was only announced Wednesday by acting antitrust commissioner Ori Schwartz. Union’s controlling shareholders, who include insurance magnate Shlomo Eliahu, plan to appeal the decision to the antitrust court. Mizrahi shares ended almost unchanged at 68.26 shekels. Union finished 2.5% lower at 15.91. (Michael Rochvarger)

Cellcom Israel profits slashed, despite gains for landline service

An ongoing price war hit Cellcom Israel’s first-quarter net profit, despite growth in the landline business of Israel’s largest mobile operator. Cellcom earned just 7 million shekels ($2 million) in the quarter, a 73% drop from the same period in 2017, while revenue slipped 2.7% to 933 million shekels. Cellcom launched a low-cost internet-based television service in 2015 that it says has garnered 184,000 subscribers, up 48% from a year earlier. The company has 235,000 customers for its internet services, a 36% rise from a year ago. Cellcom’s mobile subscriber base gained 1.1% to 2.822 million in the first quarter. Israel’s mobile phone industry was shaken up in 2012 with the entry of a host of new operators, sparking a price war that led to steep drops in subscribers, revenue and profit for Cellcom and rival incumbents Partner Communications and Pelephone, a unit of Bezeq. Cellcom shares ended down 4.4% at 24.15 shekels. (Reuters)

Pressured by costs, Super-Sol posts modest first-quarter profit gain

Super-Sol said Wednesday that net profit edged up in the first quarter as the costs of merging with its newly purchased New-Pharm drugstore chain and the launch of a private-label credit card weighed on profits. Israel’s largest supermarket chain posted net profit of 67 million shekels ($19 million) versus 66 million a year earlier as revenue jumped 9.1% to 3.2 billion shekels. Most of the revenue gain came from New-Pharm, which Super-Sol bought last year for 130 million shekels, as well as from the timing of the Passover holiday. Same-store sales rose 2.8%. Super-Sol’s credit card business lost 13 million shekels, versus a 13 million profit last year, due to costs involved in launching its own card after ending a partnership with Leumi Card. The food retailer said its private label products accounted for 23.8% of sales and that 13.6% of the chain’s sales were handled online.  Super-Sol shares finished up 5.1% at 23.35 shekels. (Yoram Gabison)

Apparel chains Castro and Golf report improved first-quarter results

Two of Israel’s biggest clothing chains reported big improvement Wednesday in their first-quarter results. Castro squeezed out a net profit of 1.3 billion shekels ($360 million), compared with a 6.3 million loss a year earlier, as sales climbed 4% to 245 million. However, the rise was in part due to the timing of the Passover holiday, which this year fell in the first quarter. The Hoodies group, which Castro acquired last year, saw revenues jump 11.5% to 184 million, but the group posted an operating loss of 2 million due to costs connected with closing stores and investment in its Urbanica chain. Golf enjoyed a more dramatic turnaround, posting net of 6.7 million shekels versus a 6.3 million loss a year ago as sales rose 11.9% to 220 million. Golf’s core fashion sales were down 2.5% but that was more than offset by a 50% increase in sales of its Adika online unit to 27 million. (Eran Azran)

Tel Aviv market puts aside worries about Gaza and Italy, and posts small gains

Tel Aviv shares ended higher Wednesday as investors put worries about fighting in Gaza and the Italian political crisis behind them. The benchmark TA-35 index edged up 0.05% to 1,512.44 points, while the TA-125 rose 0.3% to 1,364.31, on turnover of 1.3 billion shekels ($360 million). Biomedical stocks rose strongly, paced by gains of 3.6% to 13.72 shekels for Opko Health and 2.1% to 106.60 shekels for Mazor Robotics.  Elbit Systems added 1.5% to reach 426.80.  Earnings reported Wednesday mostly worked against stocks. Clal Insurance dropped 2.3% to close at 55.98 after it reported a 116 million shekel first-quarter loss, versus a 140 million profit a year ago. Paz Oil fell 1.5% to 490.80 after it reported Tuesday a steep drop in first quarter net profit to 76 million shekels from 268 million a year ago, citing smaller gross profits in the refining segment and higher financing expenses. Nice declined 2.2% to 378.90. (Assa Sasson)