TheMarker | Capital Market
Elco's revenues rose by 13.6% in 2019 to about NIS 10billion, compared with about NIS 8.9 billion in the corresponding period in2018 ■ Elco's management warns: "Ifthe crisis deepens - it will have an impact on the Group's financialresults"
Eran Azran
March 30, 2020
The Elco Group, controlled by the Salkind family, released itsfinancial statements for 2019 on Monday.
The company earned NIS 259 million in the past year - four times morethan in 2018 - thanks to improved performance in the subsidiaries. Elco's Boardof Directors approved the distribution of dividends to its shareholders in theamount of NIS 37 million, on account of the 2019 profits.
Elco's revenues (+ 4.31% 11140)rose by 13.6% in 2019 to about NIS 10.1 billion, compared with about NIS 8.9billion in the corresponding period in 2018. The increase reflects growth in allof the Group's subsidiaries. Net profits in 2019, excluding results of thediscontinued operations and other income and expenses, amounted to about NIS314 million, compared with NIS 229 million in the corresponding period in 2018.
The subsidiaries contributed aboutNIS 532 million in profits in 2019. Electra Ltd. ended the period with revenuesof about NIS 7.14 billion, and contributed a profit of about NIS 246 million,compared with about NIS 182 million in the corresponding period in 2018.Electra Real Estate recorded revenues of about NIS 152 million during theperiod, and contributed a profit of about NIS 101 million, compared with aprofit of about NIS 23 million in the corresponding period in 2018.
Electra Consumer Products recordedrevenues of about NIS 2.86 billion during the period, and contributed about NIS185 million in profit, compared with a profit of about NIS 8 million in thecorresponding period in 2018. In addition, Supergas, whose acquisition wascompleted on November 5, 2019, has produced revenues to Elco of about NIS 104.1million since its consolidation, contributing a profit of about NIS 13 million.
Elco's consolidated balance sheetshows that the Group’s cash and short-term investments, as of the end of 2019,total about NIS 1.16 billion. Elco's net financial debt totaled about NIS 395million. The Group's equity capital increased to about NIS 1.34 billion. Cashflow from current operating activities rose to NIS 848 million in 2019,compared with NIS 198 million in the corresponding period in 2018.
Elco’s senior executivescontinued to earn exceptionally high wages in 2019 as well. The cost of thesalary of Itamar Deutscher, CEO of Electra Ltd., amounted to about NIS 13.3million; the cost of the salary of Yaron Sorek, CEO of Electra Construction,amounted to about NIS 7 million; The cost the salary of Golan Telecom’s CEO,Gil Sharon's, amounted to about 4 million; the cost of the salaries of the controllingshareholders - Danny and Mikey Salkind, amounted to about NIS 4.8 million each.
The Risk of Importing Goods from China
Elco referred in its reports ofthe possible impact of the Corona crisis on its operations. According to Elco,"The spread of the Coronavirus may have an impact on the volume of exportsfrom China, and accordingly on the goods arriving in Israel. Non arrival of goods over time may adverselyaffect the scope of the Group's operations, particularly in the area ofconsumer products and construction development projects. Still, the Groupdoes not experience significant gaps in the supply of goods at this time, dueto a nearly complete return to production of its main suppliers in China, and therelease of goods after a short break in production", as stated.
Elco operates the Mahsaney Hashmaland Shekem Electric chains through its subsidiary, Electra Consumer Products. Elco noted that the restrictions on openingbusinesses, including stores for essential electrical products, allow sales tobe made only via delivery services. Accordingly, the Group has increased theactivity of selling electrical products through the Internet in order to dealwith these restrictions.
Elco further noted that the managementof the Group’s companies is currently examining the financial implications forthe Group, partly due to the existence of logistical difficulties, such asdelays in the arrival of goods from abroad, prolonged absence of employees, theconsequences of closed skies on revenues from overseas packages in the cellularindustry, and the restrictions imposed on running businesses.
According toElco, at this stage, "the disruptions are not expected to have a materialadverse effect on the Group's operations and results. Nevertheless, if theaforementioned crisis would deepen and cause a significant slowdown in businessactivity in Israel and around the world, it is expected to have an impact onthe Group's financial results."
The original Hebrew version of this article can be found at https://www.themarker.com/markets/1.8724512