A change in the company’s depreciation period prevented a further decrease of NIS 1 million in profit.
American Israeli Paper Mills in Q3 posted a moderate increase in sales to NIS 284.2 million, compared to NIS 280 million in the corresponding quarter in ‘95, although the net profit article was down 46% compared to last year, totalling NIS 8.6 million compared to NIS 16.2 million last year.
The decline in profit stems first and foremost from sales prices, still significantly lower than their record price. The sales prices of American Israeli Paper Mills products were significantly lower in the reported period compared to last year, and profitability was eroded as a result. The company’s gross profit rate (16.4%) and net operating profit rate (5.4%) in Q3 were significantly lower than the rates achieved in the corresponding quarter in ‘95, one of the company’s record periods.
At the same time as the low, yet recovering, sales prices, American Israeli Paper Mills’ net profit was also “damaged” by the important deal the company closed with the US concern, Kimberly-Clark. Since the deal, Kimberly-Clark has shared approximately half of Hogla’s profit. In practice, Kimberly-Clark bit into NIS 3.8 million of these profits, and was another factor, at least from an accounting perspective, in a decline in American Israeli Paper Mills’ net profits.