This morning, Paz Oil Company Ltd. (TASE:PZOL) published its second quarter results, showing revenue double that of the second quarter of 2020, but because of losses at its oil refinery, the company posted a net loss for the quarter of NIS 32 million.
Paz's board of directors has decided to spin off the oil refinery and distribute the shares in it as a dividend in kind to its shareholders. The decision to spin off the oil refinery, which has weighed on Paz and caused it heavy losses in recent years, was already known. Paz wants to expand in retail, and at the beginning of this month it announced the acquisition of the neighborhood supermarkets chain Freshmarket for NIS 2.1 billion.
Paz will set up a new subsidiary to which the shares in the oil refinery will be transferred. The company explained that the aim of the spin-off was "to reinforce the company's business and management focus on its core retail and services activity and to set up a real estate arm, in order to implement the company's strategic plan and create cumulative value for its shareholders."
Second quarter revenue rose by 105% in comparison with the corresponding quarter of 2020 to NIS 2.8 billion, and sales of fuels at the company's fuel stations were up 30%.
The return to routine after the lockdowns caused by the coronavirus pandemic led to a rise in sales at Paz's Yellow convenience store and Super Yuda supermarkets chains of 24%, to NIS 304 million. Revenue from the company's refining activity also rose steeply, from NIS 700 million in the second quarter of 2020 to NIS 2 billion in the second quarter of this year, thanks to a rise in the price per barrel and to a rise in sales volume. Nevertheless, the oil refinery made a loss of NIS 83 million in the quarter, which compares with a loss of NIS 76 million in the corresponding quarter, and mainly stems from exchange rate effects.
EBITDA totaled NIS 186 million in the quarter, which compares with NIS 175 million in the corresponding quarter. Excluding the refining segment, EBITDA totaled NIS 213 million, versus NIS 191 million in the corresponding quarter, representing growth of 12%.
The net loss for the quarter was NIS 32 million. Were it not for the oil refinery's losses, Paz would have posted a net profit of NIS 51 million. In the second quarter of 2020, the company posted a net loss of NIS 4 million.
Published by Globes, Israel business news - en.globes.co.il - on August 25, 2021
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