The Ticker / Slump in Oil Prices Hits Israeli Energy Shares

Leumi expects $355m tax-evasion penalty; Super-Sol aims for profitability next year; Granovsky seeks partner for Israel 18; TA-25 bounces off low, led by tech stocks.

The falling price of global oil is taking its toll on Israeli energy share prices, with Ratio leading the pack with a 14.7% decline in the past month. Avner and Delek Drilling, both part of Yitzhak Tshuva’s Delek Group, have both lost 6%. Brent crude, the benchmark petroleum, was trading below $66 a barrel on Wednesday, close to a five-year low and down more than 40% since June. While Israeli companies produce little or no oil, the price of the natural gas they do produce for sale to the domestic market is linked to the price of oil. Their contracts include a floor price but the companies won’t reveal what it is. Meanwhile, the agreements to sell gas to Egypt that the partners of Leviathan and Tamar, Israel’s two big gas fields, have signed could be in jeopardy. The gas is being sold to European companies in Egypt for liquefaction and re-export to Europe, but with world oil prices so low LNG processing may longer be profitable. (Eran Azran)

Leumi expects $355m tax-evasion penalty

Bank Leumi, Israel’s second largest lender, expects to pay 1.4 billion shekels ($355 million) to settle a U.S. tax-evasion investigation, its chief legal adviser said Wednesday. The process is expected to be completed by the middle of January, Hanan Friedman told the Knesset Economics Committee, according to a statement from the committee. “The bank’s management believes, after testing all scenarios, that it is correct to reach a settlement with the authorities, just like the world’s largest banks did,” he said. A source told Reuters last week that Leumi would likely pay $270 million to the U.S. government and $130 million to New York State’s Department of Financial Services. Leumi shares finished 0.3% higher at 13.45 shekels ($3.45). (Reuters)

Super-Sol aims for profitability next year

Super-Sol, Israel’s biggest supermarket chain, expects to return to profitability by next year, Itzik Abercohen, CEO of the embattled retailer, told TheMarker on Tuesday. “We will gradually reach break-even and return to profitability of 2% to 3%. Our goal is first and foremost not to be in the red in 2015 but to show a profit and an improving trend,” he said on the sidelines of a press conference, introducing Super-Sol’s new private label diaper. Abercohen warned big manufacturers that food retailers won’t hesitate to introduce more house brands in order to bring lower prices to shoppers. “We’ve stopped walking arm in arm with big manufacturers because at a certain point the consumer said ‘enough’ and embraced private chains,” he said, referring to discounters like Rami Levy. Super-Sol shares ended up 0.3% to 8.51 shekels ($2.16). (Adi Dovrat-Meseritz)

Granovsky seeks partner for Israel 18

Alexander Granovsky, the Ukrainian businessman who only a year ago was a prospective partner in Nochi Dankner’s bid to retain control of the IDB group, has apparently fallen on hard times. Seemingly due to deteriorating conditions in his home country, Granovsky is seeking to recruit an investor to take half of Israel 18, a closely-held holding company whose properties include Wilifood. Sources said Granovsky is seeking up to 80 million shekels ($20.4 million) for the stake and has approached a host of Haredi businessmen as potential buyers. (Eran Azran)

TA-25 bounces off low, led by tech stocks

The TA-25 index bounced off its low for the day Wednesdayto show a small gain, with index closed up 0.13% at 1,481.05 points while the broader TA-100 climbed 0.3% to 1,2313.96 on turnover of 1.38 billion shekels ($350 million). Leading the way higher was Mazor Robotics, which rallied for a third day, adding 10% to close at 29.32, after reporting new sales of its Renaissance devices. Africa Israel rose 4.1% to a 5.21 close. Allot Communications dropped 9.5% to 31.55 shekels after the stock was downgraded to Underperform from Buy by analysts at Bank of America/Merrill Lynch. Bezeq extended its losses, falling 1.3% to 7.03 shekels. after Citibank lowered its rating to Neutral from Buy. (Dror Reich)