August 27, 2018 - 3:49 AM EDT
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Paz Oil Company Ltd. Presents Second Quarter 2018 Financial Results

· Adjusted net income in Q2/2018 of NIS 119 million, 360% YoY increase · Reported net income in Q2/2018 of NIS 90 million, 100% YoY increase · Adjusted EBITDA in Q2/2018 of NIS 272 million, 71% YoY increase

YAKUM, Israel, Aug. 27, 2018 /PRNewswire/ -- Paz Oil Company Ltd. (TASE: PZOL), Israel's leading Energy and Retail Group and a supplier of a third of Israel's fuel products, yesterday reported its consolidated results for the second quarter ended June 30, 2018.

Management Comment

Yona Fogel, CEO of Paz Group Commented: "We ended the second quarter with good results despite a reduction in the regulated gasoline octane 95 margin in Israel, which was updated in May 2018 and caused a decrease in our profitability. The refining segment is enjoying a good business environment with increased margins and Paz Ashdod Refinery maintained its strong premium compared to the benchmark refining margin. In addition, the off gas recovery (OGR) facility was completed and began operating during the third quarter of 2018 and is expected to generate an additional 0.40 dollar per barrel in profit, which amounts to an approximate $14 million in a representative year."

"Given expected developments in the energy and retail markets, we are continuously examining ways in which we can maximize returns and streamline the efficiencies in our current operations, as well as identifying investments in new synergetic areas that are relevant to our operations. We expect that these initiatives will increase Paz Group's activity and profitability in areas that are not affected by the changes in the transportation fuel market. This will reduce our potential exposure to the anticipated changes in this evolving market and we will continue to grow in parallel to our traditional operations."

"As part of the development of this future infrastructure, we are examining our operations as a significant player in the changing electricity sector and considering investments in desalination facilities. In addition, we are enhancing our real estate activities to maximize the potential and profitability from our unrealized real estate rights (approximately 150 thousand square meters).

"At the same time, as a large retail company operating in a continuously evolving market which is transitioning to increased online purchases, we are making ongoing investments in enhancing our retail activity, through the sale of non-fuel items in our convenience stores. We are entering the E-commerce world by integrating our gas stations as points of collection and distribution which offer a solution to the problem of the "last mile". We are doing this by offering delivery via our automated Yellowbox lockers which are already located at 140 stations across Israel. As part of this process, we have recently developed a new loyalty program for our customers through an innovative "app" that enables fast and convenient electronic payments for fueling and "non-fuel" products available on our Yellow Click and Pick site."

Main highlights for Paz Group by Segment

Retail and Wholesale Segment

Operating income for the Retail and Wholesale segment in Q2/2018 totaled NIS 107 million compared with NIS 109 million in Q2/2017 despite the reduction of the regulated gasoline margin of NIS 0.05 (5 agurot) per liter. This represents an additional annual cost amounting to approximately NIS 35 million, reducing the profitability from gasoline.

As mentioned earlier, in the Retail and Wholesale Division, the positive trends of increased demand for gasoline and diesel continued, as did the sales from "non-fuel" activities. The Company's emphasis in recent years on diversifying its fuel station sales, particularly the share of "non-fuel" sales, continues to bear fruit. Despite the reduced regulated gasoline margin, the segment's profit decreased by only NIS 2 million compared to Q2/2017 due to the increase in quantities sold which offset most of the decrease and the continued sales growth of the Yellow convenience store chain.

The Yellow convenience store chain demonstrated another strong quarter with revenue growth of 5% compared to Q2/2017 which is due to the increase in the number of transactions, with total revenues for the quarter amounting to NIS 232 million.

Refining Segment

The adjusted operating income of the Refining segment totaled NIS 49 million in Q2/2018 compared to an adjusted operating loss of NIS 54 million in Q2/2017 during which the periodic maintenance period occurred at the Paz Ashdod Refinery. The profitability in this quarter was reasonable, yet below expectations due to lower refining margins compared to the corresponding quarter last year, primarily as a result of lower gasoline margins and an increased price of oil. During the quarter, the Refinery maintained a high level of production and operated at an optimum level.

Paz Ashdod Refinery maintained a high premium compared to the benchmark refining margins. In Q2/2018, the Paz Ashdod Refining margin totaled $7.6/barrel compared to the Ural benchmark margin of $4.4/barrel, and the KBC benchmark margin of $4.7/barrel.

The construction of an OGR facility (off-gas recovery) was completed in June and began operating in July and is now close to operating at full capacity. The OGR facility is expected to contribute between $0.4-$0.7/barrel and to lessen the impact of the price of oil on Paz's refining margin by lowering the cost of self-consumption and losses of the Refinery.

Industries and Services Segment

The Industries and Services segment operating income was NIS 33 million in Q2/2018 compared to NIS 40 million in Q2/2017. The decrease is primarily due to competition in Pazgas' market and increases in the price of raw materials at Paz Lubricants and Pazkar. Paz Aviation Services and Assets continue to grow in quantities sold and maintained its profits due to the continued growth in the aviation sector.

 

 

Consolidated Statement of Income













Six months ended

Six months ended

Three months ended

Three months ended

Year ended, December 31,


2018

2017

2018

2017

2017

NIS Millions (except per share data)

unaudited

unaudited

unaudited

unaudited

audited

Revenues

6,724

5,182

3,674

2,323

11,285

Cost of Sales

5,837

4,274

3,210

1,988

9,480

Gross Profit

887

908

464

335

1,805







Selling and marketing expenses

474

455

242

226

935

General and administrative expenses

73

85

30

41

191

Other income, net

0

17

-1

20

13

Total operating expenses

547

557

271

287

1,139

Operating income

340

351

193

48

666







Financial income

28

117

9

53

201

Financial expenses

154

67

88

36

135

Financial income (expenses), net

-126

50

-79

17

66







Income before income tax

214

401

114

65

732

Income tax expenses

47

86

24

19

157

Net income for period

167

315

90

46

575







Attributable to:






Equity holders of the Company

166

313

90

45

572

Non-controlling interests

1

2

0

1

3

Net income for the period

167

315

90

46

575







Net earnings per share attributable to equity holders of the Company:






Basic net earnings per share (in NIS)

16.31

30.83

8.81

4.45

56.35

Diluted net earnings per share (in NIS)

16.28

30.78

8.8

4.45

56.21

 

The information presented in this press release is presented solely for the convenience of the reader and does not constitute a basis for making any investment decisions or any recommendation or opinion nor is it a substitute for the exercise of judgment by an investor or a potential investor. This press release is presented in a condensed format only and in order to receive a full picture of the Company's operations, the reader is referred to the Company's full reports as submitted to the Securities Authority and to the Stock Exchange.

The Company has included in this press release forward-looking information, as defined in the Securities Law, 1968, in relation to itself and to its investees. Inter alia, such information contains forecasts, objectives, evaluations and estimates, which relate to future events or matters, whose realization is not certain and which are not under the Company's control. Forward-looking information does not constitute a proven fact and it is based solely on the Company's subjective evaluations. When making such assumptions, the Company relied, inter alia, on the analysis of general information available to it at the time of preparing this report, including publicly available information, research work and surveys, which did not contain a commitment as to the correctness or the completeness of the information therein and whose correctness has not been independently tested by the Company. In addition, the realization and/or the non-realization of the forward-looking information will be affected by factors that cannot be evaluated in advance and which are not under the Company's control, including the specific risk factors underlying the Company's operations, as detailed in the periodic report, as well as developments in the general environment and in external factors that affect the Company's operations. Accordingly, even though the Company believes that its expectations, as they appear in this press release, are reasonable, there can be no certainty that the Company's actual results in the future will be in accordance with said expectations, but rather, they may differ from the expectations presented in the forward-looking information presented in this report.

 

 

 

Contact Information:
Omri Arens   
Investor Relations and Credit Risk Manager, Finance Division   
Paz Oil Company, Ltd.   
Office: +972-9-8930656     
[email protected]

 

 

Cision View original content:http://www.prnewswire.com/news-releases/paz-oil-company-ltd-presents-second-quarter-2018-financial-results-300702525.html

SOURCE Paz Oil Company, Ltd


Source: PR Newswire (August 27, 2018 - 3:49 AM EDT)

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