Despite the Crisis: Elco's Net Quarterly Profit Increased by 20% to NIS 54 Million
Yesterday, the subsidiary, Electra Consumer Products, reported the completion of the transaction for the sale of its holdings in Golan Telecom for approximately NIS 574 million
The Elco Group, controlled by Danny and Mikey Salkind, published its financial statements for the second quarter of 2020 today (Thursday). Revenues rose by 7.5% in the quarter to NIS 2.68 billion, compared to NIS 2.49 billion in the corresponding quarter last year. The group ended the quarter with an 18.4% increase in net profit to NIS approximately 54 million (attributable to shareholders), compared to NIS 46 million in the corresponding quarter in 2019.
In the second quarter, the public subsidiary companies contributed approximately NIS 123 million to Elco's profits: Electra Ltd. (+ 0.22% 149300) ended the quarter with revenues of approximately NIS 1.8 billion, and contributed a profit of approximately NIS 47 million, similar to the corresponding quarter last year. Electra Real Estate (+ 0.07% 1502) recorded revenues of NIS 39 million in the quarter, and contributed a profit of NIS 29 million, compared to a profit of approximately NIS 26 million in the corresponding quarter last year.
Electra Consumer Products (+ 3.24% 9950) recorded revenues of approximately NIS 744.6 million in the quarter, and contributed a profit of approximately NIS 35 million, compared to a profit of approximately NIS 26 million in the corresponding quarter last year. Supergas Energy (+0.64% 8830), which completed an IPO in June 2020, recorded revenues of approximately NIS 120 million in the quarter, and contributed a profit of approximately NIS 12 million.
Elco ended the first half of 2020 with an increase of approximately 25% in net profit to NIS 110 million (attributable to shareholders), compared to approximately NIS 80 million in the corresponding quarter last year. The profits raised the group's shareholders' equity, as of the end of June, to approximately NIS 1.5 billion (attributable to shareholders).
Elco's consolidated balance sheet shows that the group has a short-term cash and investment balance of approximately NIS 1.33 billion. The total net financial debt (individually - excluding subsidiaries) amounted to only approximately NIS 436 million at the end of June.
Yesterday, its subsidiary, Electra Consumer Products, reported the completion of the transaction for the sale of Golan Telecom to Cellcom for approximately NIS 648 million. In accordance with its holding in the Golan (90.01%) and after deducting options for employees at Golan, Electra Consumer Products' share in the consideration amounts to approximately NIS 574 million and it is expected to record a pre-tax capital gain in the third quarter of 2020 for completing the transaction, in the amount of approximately NIS 230 million. Since the acquisition of Golan Telecom in April 2017, Electra Consumer Products has recorded cumulative profits - including its share of Golan's profits and the aforementioned capital gain - in the amount of approximately half a billion NIS in respect of Golan Telecom.
Avi Israeli, VP of Business Development at Elco, stated: “In the second quarter, we completed a significant step with the initial public offering of the Supergas shares on the Stock Exchange, which we acquired in November 2019, and which has since become a fourth and significant arm of business operations of the Elco Group. In the first half of the year, Electra Ltd. continued to show an improvement in its significant operational parameters, along with a continued increase in the backlog of works, amounting to more than NIS 14 billion. In addition, during the second quarter, Electra began operating the pumped storage facility at Gilboa, which Electra Consumer Products developed and established.
"Electra Consumer Products showed a significant improvement in its results in the first half of the year, as a direct continuation of the company's strategy, which includes, inter alia, deepening operations in the air conditioning sector, expanding sales channels of imported products, strengthening the retail division's website and streamlining the sales floor in that department.
"In addition, yesterday the company reported the completion of the transaction for the sale of the company’s holdings in Golan Telecom for approximately NIS 574 million. The consideration in the transaction reflects for Electra Consumer Products a return of more than 800% on the capital it invested in the acquisition of the company, and cumulative profits of more than half a billion shekels. Electra Real Estate concluded the period with a continued increase in NOI from the housing clusters activity in the US and with an increase in net profit, and it continues to expand its activity in the markets wherein it operates."