Business in Brief: OECD Projects Israeli Economy to Pick Up Pace

Hadera Paper swings to operating profit; Mega catches a break with rent cut; Offers value Clal at 50% above trading price; Tel Aviv stocks down as shekel drops.

Bloomberg

OECD: Israeli economy to pick up pace

Israel’s economy is projected to expand at a moderate 2.5% for 2015 but will pick up the pace to 3.2% for 2016 and 2017 — more quickly than many of the world’s economic leaders, the OECD forecast Monday. Unemployment is projected to stay at a moderate 5.2% through 2017. The OECD mentioned low unemployment and salary increases — mainly due to an increasing minimum wage — alongside decreasing prices of imports and fuel. It said the passage of a new expansionary budget would also help boost Israel’s economic growth. Meanwhile, exports are expected to rise next year as the global economy recovers. Private consumption in Israel is expected to expand at 4% to 5% annually for the next few years, driven by the high employment rate, real increases in salaries and decreased prices of imports, the OECD says. (Moti Bassok and Ronit Domke)

Hadera Paper swings to operating profit

Hadera Paper made an operating profit of 10 million shekels in the third quarter, compared with a loss of 43 million shekels a year earlier. The company, now controlled by the FIMI fund, makes and sells paper via subsidiaries. Hadera Paper recently went through an efficiency plan. In the quarter, it limited its net loss attributed to minority shareholders to 9 million shekels, versus 59 million shekels a year earlier, when it was controlled by Len Blavatnik. AIso in the quarter, the company cut its financing expenses by 28% to 18 million shekels. (Shelly Appelberg)

Mega catches a break with rent cut

The floundering Mega supermarket chain is getting a rent decrease of 9% thanks to its landlord, Blue Square Real Estate — a fellow subsidiary of Blue Square. Blue Square Real Estate’s board approved the two-year rent cut on Thursday. Mega is striving to reach a debt settlement with banks, landlords and suppliers to give the company better terms for paying off its 1.3-billion-shekel debt. The rent cut is forecast to reduce Blue Square Real Estate’s revenues by 10 million shekels a year for the next two years, and the fair value of the company’s real estate holdings are forecast to drop by 13 million shekels as a result. Before Mega launched its efficiency plan, Blue Square Real Estate rented the supermarket 86 branches as well as a logistics center, and took in 140 million shekels a year in operating revenues. (Michael Rochvarger) 

Offers value Clal at 50% above trading price 

IDB Development has revealed three offers it received for subsidiary Clal Insurance, all from Chinese groups valuing the company at some 50% more than its current trading price. Clal shares closed 8% higher on the news, pushing the company’s market value to 3.3 billion shekels. IDB Development, which is in the process of issuing shares worth 200 million shekels, was forced to release information on the offers it received for its 55% stake in Clal. All three offers were received about two weeks ago and value Clal at 4.5 billlion to 5 billion shekels, which is between 45% and 60% above its current market cap. (Michael Rochvarger and Shelly Appelberg)

Tel Aviv stocks down as shekel drops  

Tel Aviv stocks fell slightly Monday, and the shekel lost strength against the dollar but gained against the euro. The blue-chip Tel Aviv-25 Index fell 0.5% to close at 1,562 points, while the broader Tel Aviv-100  dipped 0.3% to 1,354. The Banks-5 index eased 0.2%, while the Real Estate-15 gained 0.6% and oil and gas shares lost 1%. Total turnover was 1.4 billion shekels, slightly above the recent average. Clal Insurance gained 8% after parent IDB Development said it had received offers to buy the insurance company from three Chinese groups that valued it at some 50% above its current trading price. The communications index rose 1.3% on news that Cellcom plans to buy newcomer Golan Telecom. (Shelly Appelberg)