Business in Brief: IDB Exchanges Sharp Words With Its Clal Unit

Africa Israel posts first-quarter loss | Osem reports weak first-quarter results | Tel Aviv higher on back of Wall Street gains

Eyal Toueg

IDB exchanges sharp words with its Clal unit 

IDB Development Corporation and its controlling shareholder, Eduardo Elsztain, traded sharp words with its Clal Insurance subsidiary over the weekend. IDB, which owns 55% of Clal but has no direct control of the company because it is under government orders to divest it, faulted management for Clal’s poor stock-market performance and suspending dividend payments while it seeks to meet the Solvency II standards for beefing up capital. It also criticized the new pay package for Clal chairman Dan Naveh for lacking a performance-related bonus. “The company has portrayed itself as a victim and claims it can’t pay dividends or repurchase shares as required to meet the provisions of Solvency II. Of course it is easier to blame someone else rather than acknowledge a lack of leadership,” IDB said in a letter. Clal’s board answered back that IDB had no authority to intervene in its business and ascribed its problems to a “period of significant and frequent changes in the industry.” Clal shares ended down 0.9% at 42.22 shekels ($10.98). (Assa Sasson)

Africa Israel posts first-quarter loss

Africa Israel Investments, whose Russia-focused property subsidiary AFI Development has been hit hard by the weak Russian economy, yesterday posted a net loss of 41 million shekels ($10.7 million) for the first quarter, compared to a profit of 9 million shekels a year ago. London-listed AFI, which is 65%-owned by Africa Israel, recorded a $32-million loss for the first three months of the year. The worsening situation prompted Russian bank VTB to call for early repayment of a $611-million loan to AFI Development for projects including the AFI Mall in Moscow. Alternatively, the parties are examining the possibility of the loan being paid off with the bank taking possession of a number of substantial assets. Africa Israel said last week it was seeking a debt settlement with bondholders for the second time since 2010. It has 3.1 billion shekels in Israeli bonds to be repaid. Africa Israel ended down 0.4% at 13.06 shekels. (Reuters)

Osem reports weak first-quarter results

Osem, the Israeli food company taken private by Switzerland’s Nestle, turned in weak first-quarter results yesterday that suggested the company faces a challenging future and that Nestle didn’t undervalue minority shareholders. Osem reported that net profit fell 1.5% to 1.02 billion shekels ($260 million) in the three months from a year ago. The decline would have been worse, if not for a 5.3-million-shekel tax benefit due to a cut in the corporate tax rate. Sales were down 2.3% from a year ago to 1.06 billion shekel. Domestic sales held up well despite sagging food sales nationwide, but overseas sales posted a 13.6% decline to 155 million shekels, Osem said, attributing the decline to lower sales of its Veggie Patch meat-substitute products in the United States and an appreciation of the shekel. Osem was delisted from the Tel Aviv Stock Exchange in April amid a dispute by minority shareholders over whether Nestles’ offer of 82.50 shekels a  share for the stock undervalued the company. (Yoram Gabison)

Tel Aviv higher on back of Wall Street gains

Tel Aviv shares ended higher yesterday, following gains on Wall Street over the weekend. The TA-25 and TA-100 indexes each finished up about 0.3%, at 1,435.15 and 1,244.26 points, respectively. Turnover was 420 million shekels ($109 million). SodaStream led gainers on the TA-100, adding 3.7% to end at 75.41 shekels. El Al Airlines turned higher despite weak first-quarter results last week, advancing 2% to 2.49 shekels. Tech, biomedical and financial stocks were all lower. Mazor Robotics, which rallied after a deal with Medtronic this month, ended down 4.3% at 31.24. Halman Aldubi yesterday recommended investors avoid increasing their weighting in equities despite recent declinse in share prices. “We believe the market will continue to be volatile in the near term due to the relatively weak economic data that has been released and the higher risk,” the investment house said. In the fixed-income markets, the price of the government’s 10-year Shahar bond rose 0.27% to cut its yield to 1.78%. The Shahar due in 2042 rose 0.55% to a yield of 2.87%. (Shelly Appelberg)