Delek Group Ltd. (TASE: DLEKG), controlled by Yitzhak Tshuva, posted double-digit revenue and profit growth in 2011, driven by fuel operations in the US and Europe, as well as natural gas exploration and production in Israel.
Net profit rose 53% to NIS 2.6 billion in 2011 from NIS 1.7 billion in 2010. The company will distribute a dividend of NIS 120 million for the fourth quarter, bringing the dividends for the year to NIS 425 million. The company distributed NIS 1.06 billion in dividends in 2010.
Revenue rose 38% to NIS 59.2 billion in 2011 from NIS 42.8 billion in 2010. Most of the growth was due to the consolidation of Delek Group's international operations Delek US Holdings Inc. (NYSE:DK) and Delek Europe BV, and increased production and sales by Delek US. A contributing factor was the improvement in the company's natural gas sales in Israel through Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L).
Delek US contributed NIS 378 million to Delek Group's profit in 2011, compared with a loss of NIS 213 million in 2010. Oil and gas exploration and production revenue rose to NIS 723 million in 2011 from NIS 558 million in 2010, and its net profit rose to NIS 197 million from NIS 64 million. The growth was due the increase in natural gas sales from Yam Tethys to 4.3 billion cubic meters from 3.2 BCM in 2010. The sharp increase was primarily due to sales to IEC which were increased due to continued interruptions of supply by its Egyptian supplier East Mediterranean Gas Company (EMG).
The net profit of Delek Israel Fuel Corporation Ltd. (TASE: DLKIS), in which Delek Group owns a 86.9% stake, fell to NIS 18 million in 2011 from NIS 60 million in 2010, due to higher operating expenses, and the government's reduction in fuel marketing margins on September 1, 2011.
The 2011 net profit includes a one-time capital of NIS 3.3 billion from the acquisition of a 51.8% controlling stake in Cohen Development & Industrial Buildings Ltd. (TASE: CDEV), a shareholder in Avner and Delek Drilling. This was partly offset by NIS 2.1 billion in one-time expenses in 2011, up from NIS 1.3 billion in 2010.
The growth in Delek Group's energy business was partly offset by losses in its financial and insurance operations, carried out through The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5), in which owns 55%, and its wholly owned US subsidiary Republic Group of Companies Inc. These operations contributed a loss of NIS 48 million to Delek Group's net profit in 2011, compared with a positive contribution of NIS 275 million in 2010. Phoenix's net profit fell to NIS 69 million in 2011 from NIS 333 million in 2010, mainly due to lower equity market returns in 2011 compared with 2010. Republic Companies net loss rose to $111 million in 2011 from $2 million in 2010, mainly due to damage caused by hurricanes.
Delek Group CEO Asi Bartfeld said, "2011 was another good year for the Group. Our energy activities which is our core focus, and includes the sale of natural gas, the refining segment and gas stations around the world, contributed NIS 598 million to our net profit. In addition, we maintain a strong balance sheet with NIS 1.2 billion currently available in cash."
Bartfeld added, "We made significant progress with the Tamar reservoir and signed a number of key supply contracts including with the Israel Electric Corporation (IEC). The development of the 9.7-trillion cubic foot (TCF) Tamar reservoir remains on track for production in the first half of 2013, and we are currently assessing development options for the significant 16.7-TCF Leviathan discovery. Furthermore, we recently made a new discovery at the Aphrodite drill site in Block 12 Cyprus, as well as at Dolphin and Tanin, which are off the coast of Israel. Overall, we are very excited with regard to the potential from our natural gas discoveries, and we look forward to realizing this potential over the coming years."
Delek Group's share price rose 1.2% by midday today to NIS 734.10, giving a market cap of NIS 8.3 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on April 1, 2012
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