February 28, 2021

The Corona Party of Electra Consumer Products

The company's reports reveal a jump of 142% in profit from manufacturing and importing electrical products and of 75% in profit from retail activity. The company plans to enter the credit sector.

By Orna Yaffet

Electra Consumer Products' 2020 summary reports reveal a jump in profits and an improvement in all parameters, in the electrical products sector, in which the leading players were the first to raise their prices when the crisis broke out last year. Gross profit increased by 26% to NIS 622 million, and the annual operating profit jumped by more than 220% to NIS 130 million. The company operates in two sectors: manufacturing, importing and distributing electrical products; and retail, via the Shekem Electric Mahsanei Hashmal chains. Electra's segment profit in the first segment jumped by no less than 142%.

Electra Consumer Product ended the year with a net profit of NIS 292 million, compared to NIS 185 million, an increase that was partly affected by the sale of Golan Telecom. The company will distribute a dividend of NIS 40 million in April 2021. Against the backdrop of the corona crisis, online sales in 2020 on the Electra Consumer Products website jumped by 187% and amounted to NIS 203 million, which constitutes 13% of the company's total revenue, compared to only 6% from the revenues in 2019. According to the company, the number of visits to the website has doubled compared to 2019 to 22 million visits.

Interested in Separating the Retail Business

The company owned by Elco of the Salkind brothers is now trying to change strategy, and instead of an electric consumper products company it seeks to define itself as a lifestyle company – “improving the household’s quality of life”, as worded by the corporation.  This, while setting an ambitious annual sales target of NIS 1.5-2 billion NIS for the coming two years in each of its two sectors: import and marketing of electrical products and electrical retail.

These moves are promoted against the backdrop of the growth in sales of the retail sector of Electra Consumer Products, which increased by a total of 22.6% to NIS 1.5 billion in 2020, while a 45% jump in sales in the fourth quarter alone amounted to NIS 486 million. This increase in sales of the retail activity in the fourth quarter benefited from a 27.5% increase in sales of identical stores (stores that operated in both during the reporting period and during the corresponding period), which amounted to NIS 4,402 per square meter. The segment profit from the retail activity in the fourth quarter amounted to 26.7% - a jump of 86% compared to the corresponding period last year.

As part of its efforts to promote the retail activity, Electra Consumer Products acquired companies in the leisure and home products sectors, and in February it signed a memorandum of understanding to purchase 50.01% from an import and marketing company for sports equipment for NIS 85 million, which name it refused to provide. At the same time, the company is working towards the purchase of shares in the Bitan Wines retail chain and is holding talks to obtain a franchise for the American convenience store chain Seven Eleven.

Recently, Electra Consumer also acquired the Office Repo operations at Duty Free and established a joint venture with Hamilton to import Toshiba products. At the same time, the company's management intends to expand the activity of the retail stores of the electricity storage chain in the Arab and ultra-Orthodox sector in a model of an operational franchisee.

As part of its efforts Electra needs to try to flood value to its growing retail business. Since it cannot issue the retail sector as a separate religion, it is working to separate it from its activities and sell 20% of it to a financial partner. A valuation carried out by Agio last December gave the company's retail operations a value of NIS 767 million.

According to Electra Consumer Products CEO Zvika Schwimmer, "We want to expand our retail operations with new sofas companies in this field, and reach NIS 2 billion in this sector. Therefore, we are interested in bringing in a financial investor who will put money into the bar and allow us to purchase more activities. ". Separation of retail for independent activity

Allow the company to issue a separate customer club and issue a credit card.

The air conditioners are still the core

Data from Electra Consumer's Electrical Products segment show how dominant the air conditioner's activity is still for the company's performance. Clal Gezer's sales in 2020 amounted to NIS 1.16 billion - an increase of 4% compared to 2019.

Of this amount, NIS 1,964 million came from the sale of 1 air conditioners, which constitute 37% of the company's total revenues.  Compared to 2019

air conditioner sales jumped 41 percent.

Despite this, the profit in the electricity products segment was the same in the current quarter as in the corresponding quarter and amounted to NIS 4.3 million. This is due to a one-time provision in respect of the cessation of marketing of a split air conditioner product line in the Daikin brand, of approximately NIS 5 million. Ben-Troll This provision was a segment profit of about NIS 9 million.

Gross profit improved by 38% in the fourth quarter of 2020 and amounted to NIS 165 million. Its share of sales increased to 23.2% of sales, compared with 22.3% in the corresponding period last year, mainly due to an increase in air conditioner sales, which was offset by a decrease in the gross profit margin in the brand trade and a decrease in the rate.

Gross profit in the electricity retail sector.

However, gross profit in the electricity retail sector increased due to the increase in sales turnover.

Operating profit jumped by 118% in the fourth quarter and your total by NIS 20.9 million. In the bottom line, Al-Katra ended the fourth quarter with a decrease in net profit, which amounted to NIS 10.6 million, compared with NIS 15.8 million in the corresponding quarter, in which the company recorded a net profit from Golan TelecArAriom's operations, which was discontinued, NIS 14.6 million.

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