Shikun & Binui Holdings Ltd. (TASE: SKBN) is considering the sale of its holdings in Solel Boneh Infrastructure (SBI), the subsidiary that handles the group's international infrastructure business, Shikun & Binui today reported together its results for the first quarter of 2018.
SBI's business has been hit hard over the past year, among other things by an investigation concerning bribery by former company executives in Kenya. The investigation forced Shikun & Binui to deposit NIS 250 million in a fund in order to release the company's accounts for funding its regular business.
Shikun & Binui, controlled by Shari Arison, said in last March when it published its reports for 2017, "The company is unable at this stage to assess the results of the World Bank's audit and the exposures for it," while noting, "Concern exists about future sanctions by the World Bank, including mainly suspension for a given period from competing in future tenders for projects financed by the World Bank, together with possible additional sanctions, such as the return of money obtained from loans provided by the World Bank and repairing damage." A police investigation also taking place in the matter is in Israel involves former executives in the group.
Projects managed by Shikun & Binui vis-a-vis the World Bank are in Ethiopia, Tanzania, Guatemala, and Kenya, not in anchor countries for the company (mainly Nigeria, where an economic crisis affected Shikun & Binui's business and caused steep depreciation in the local currency, the naira). As far as is known, the World Bank is apparently linked to less than 5% of Shikun & Binui's current orders backlog, should sanctions be imposed on projects that are already underway (something that will not necessarily happen).
Shikun & Binui reported a 28% drop to NIS 1.35 billion in revenue in the first quarter. Revenue from infrastructure contracting and construction in Israel were down 30% to NIS 739 million, and revenue from overseas infrastructure activity outside the US fell by the same rate to NIS 322 million, mainly due to a drop in business in Nigeria. Revenue from real estate development in Israel fell 26% to NIS 274 million as a result of smaller housing sales by the company.
Operating profit sank 77.6% to NIS 45 million, while net profit plunged to NIS 17 million, 78% less than in the corresponding quarter last year.
Shikun & Binui CEO Yuval Dagim said today, "We finished the first quarter of 2018 with an orders backlog of NIS 13.7 billion. In addition, the company has NIS 3.2 billion in additional projects that have yet to enter its orders backlog. Shikun & Binui is focusing on its core business in Israel and a grow west strategy and is considering measures for generating value for the shareholders."
Published by Globes [online], Israel business news - www.globes-online.com - on May 28, 2018
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