January 24, 2020

Family Business: Real Estate and Food Celebrations - and One Company that Drives in Reverse Gear

The Marker

Family Business: Real Estate and Food Celebrations - and One Company that Drives in Reverse Gear

Electra doubled its value in the past year to NIS 6.6 billion ■ Strauss earned NIS 446 million in the first three quarters of last year ■ Carasso Motors' earnings plunged in 2018, its revenues froze and its stock was cut by 43%

Netanel Games

Published on January 24, 2020

The Tel Aviv Family Index (-2.21% 2206.13) was launched in October 2018 and has since stolen the limelight of the leading indices, with a 55% return. The main thresholds for entering the Index are a minimum holding rate of 40% by stakeholders, and at least three family members serving on the board of director.  Research has shown that family companies produce higher returns, but the sector in which the company operates cannot be ignored. We have selected three companies from different fields and have examined their performance over the past three years.

Electra Ltd.: 211% increase

Electra (-0.17% 178100), one of the largest contracting groups in Israel, is controlled by the Salkind family through Elco Holdings. The company has doubled its value in the last year to NIS 6.6 billion and may enter the TA 35 Index in February. Electra is enjoying the boom in the real estate industry and is showing impressive results under the management of Itamar Deutscher - one of the highest paid salaries on the stock exchange. The company grew an average of about 12% in 2014-2018, to NIS 6 billion; At the same time, profit grew by about 10%, to NIS 182 million. Investors have been enjoying NIS 212 million in dividends since January 2017.

Investing in their family

What would be left from a NIS 100K investment made three years ago?

Electra

Strauss

Carasso Motors

Strauss: 89% increase

Strauss (-0.11% 109.75) is the second-largest player in the Israeli food market, and it is getting the blame for its contribution to high coffee prices in Israel as a result of its control of the market. The company earned NIS 446 million in the first three quarters of last year - an increase of 11% compared to the corresponding period in 2018, which was partly due to an improvement in gross profitability of operations in Israel. The company's stock reacted with a 29% increase in 2019, twice that of the TA 35 Index, to a value of NIS 12.2 billion.  Since January 2017, Strauss has distributed NIS 520 million in dividends, of which NIS 298 million to the controlling stakeholder, the Strauss family.

Carasso: 37% decrease

Carasso Motors (-1.8% 1633), controlled by the Carasso family, is an importer of Renault and Nissan vehicles. The automotive industry is suffering from a slowdown after years of sharp increases in vehicle delivery, and this is also reflected in Carasso's performance. The company's profit crashed in 2018, revenues froze and the stock was cut by 43%. A 200% jump in profit in the second quarter last year catapulted the stock, but the weaker results in the following quarter cooled the enthusiasm. The company, which trades at a value of NIS 1.3 billion, distributed dividends of NIS 355 million in 2017, twice as much as in the two consecutive years, cumulatively.

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