Israeli supermarket chain Shufersal Ltd. (TASE:SAE) today published its financial results for the second quarter and first half of 2019. The company's revenue, gross profit, operating profit, and EBITDA were higher in the first half of this year than in the first half of 2018, but its net profit was down. The company attributed most of the decrease to external factors, such as implementation of a new accounting standard, the exchange rate, and the timing of real estate appraisals.
Shufersal reported NIS 3.4 billion in revenue in the second quarter, 9% more than its NIS 3.1 billion in revenue in the corresponding quarter last year. The company attributed the increase to growth in its retail activity, the timing of the Passover holiday, and stronger activity in its Be pharmacy chain.
Shufersal's revenue in the first half of the year totaled a record NIS 6.6 billion, 4.1% more than its NIS 6.3 billion in revenue in the first half of last year. Same-store retail food sales were up 5.7% in the second quarter and 0.6% in the first half, compared with the corresponding periods last year.
Gross profit amounted to NIS 920 million in the second quarter, 26.8% of sales turnover, compared with NIS 851 million, 27.0% of sales turnover, in the second quarter of 2018. The cause of the increase was growth in the group's activity. Gross profit reached NIS 1.780 billion in the first half of 2019, 27.1% of sales turnover, compared with NIS 1.701 billion in the first half of last year, 26.9% of sales turnover.
Operating profit from current activity amounted to NIS 138 million, 4% of sales turnover in the second quarter, compared with NIS 123 million, 3.9% of sales turnover, in the corresponding quarter last year. Operating profit from current activity in the first half of the year was NIS 267 million, 4.1% of sales turnover, compared with NIS 236 million, 3.7% of sales turnover, in the corresponding period last year. The increase resulted from implementation of the IFRS 16 accounting standard.
Net profit in the second quarter totaled NIS 48 million, compared with NIS 88 million in the second quarter of 2018. Shufersal stated that the decrease in net profit in the quarter was mainly a result of the new standard, revaluations conducted last year, and higher financing expenses due primarily to the increase in the Consumer Price Index and the fall in the exchange rate. Net profit fell from NIS 152 million in the first half of 2018 to NIS 96 million in the first half of this year as a result of the new accounting standard, revaluations last year, and higher financing expenses due primarily to the rise in the Consumer Price Index and the fall in the exchange rate.
Second quarter EBITDA was NIS 319 million, compared with NIS 192 million in the corresponding quarter last year. The increase is attributable mainly to the new accounting standard. First half EBITDA was NIS 624 million, compared with NIS 385 million in the corresponding period last year. This increase is also attributable mainly to the new accounting standard.
Commenting on the report, Supersal chairman Mauricio Wior and CEO Itzik Abercohen said today, "We are glad to report good results for the second quarter, reflecting successful implementation of the company's strategy in its core business and business activities in new areas that it has entered in recent years.
"The combination of the measures that we have taken caused an impressive rise in its revenue, which exceeded NIS 6.5 billion in the first half of the year, a record, together with improvement in the company's gross and operating profit measures.
"Food retaining continues to be the main and most stable anchor in the company's activity, in which it continues to lead the Israeli market, while promoting innovation and constant improvement in the value offered to the customer. We continue to operate in a wide range of sectors and areas to promote business innovation, expand the range of services, and improve the quality of our service in order to provide an optimal response to the Israel consumer's dynamic needs. We thank the company's employees for their dedicated work and their major contribution to the company's success."
The company added that the activity of its subsidiary, Be (formerly New Pharm) was "progressing according to the work plan, with new branches being opened and expansion of the online channel, which will make Be the successful pharmacy arm of the Shufersal chain."
Published by Globes, Israel business news - en.globes.co.il - on August 14, 2019
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