Delek Profit Down, Israel

Delek Group announced its results for the fourth quarter and full year period ended December 31, 2012.

Financial Highlights of the Full Year 2012 Period

• Group net income amounted to NIS 446 million. This is compared with net income of NIS 2.6 billion last year though it is important to note that Delek Group recorded a one-time accounting profit gain of NIS 3.3bn in 2011 due to the acquisition of Cohen Development;
• The 2012 Group net income excluding capital and other gains amounted to NIS 1 billion, compared to NIS 546 million last year (please see table after the net income table in the directors report for more information)
• Group operating profit grew to NIS 2.9 billion, a 78% increase compared with NIS 1.6 billion in the same period last year;
• Delek Group declared a dividend of NIS 220 million for the fourth quarter of 2012, contributing to a total for 2012 of NIS 365 million;
• Strong improvement at US Oil Refineries;
• In 2012, the Tamar gas partners signed 14 deals for the supply of natural gas to the domestic Israeli market in Israel for a total estimated revenues of approximately $39 billion;

Group revenues in 2012 were NIS 71.6 billion, a 21% increase compared with NIS 59.2 billion in 2011. The increase was primarily due to the Lion Oil refinery operations which were consolidated in the corresponding period last year for only nine months. Lion’s contribution in 2012 was NIS 13.7 billion compared with NIS 7.8 billion last year.

Operating profit in 2012 totaled NIS 2.9 billion, a 78% increase compared with NIS 1.6 billion in 2011. The increase was primarily due to the strong improvement in the US Refining Segment as well as an operating profit from Republic which reported an operating loss in 2011.

Net income in 2012 totaled NIS 446 million, compared with net income of NIS 2.6 billion in 2011. In 2011, the Group recorded a one-time accounting profit gain of NIS 3.3 billion due to the acquisition of Cohen Development. The contribution to the net income excluding capital and other gains amounted to NIS 1 billion in 2012, compared to NIS 546 million last year.

Mr. Bartfeld, CEO of Delek Group, commented “2012 was a year of continued development of our natural gas discoveries as well as continued strengthening of our financial position. Our cash balance of NIS 1.9 billion firmly places us as one of the strongest companies in the Israeli market.”

Continued Mr. Bartfeld, “We are very excited with the upcoming start of production from the Tamar gas field expected soon, which will serve the domestic Israeli market’s energy needs for the next two decades, further improving our cash flow. In the past year, we secured many significant contracts for the supply of natural gas from Tamar and we are looking forward to reaping the financial rewards from our investments in this field in the future. The Israeli energy industry has become a very vibrant sector in the past few years and we are proud of our status as the leading domestic player in this market. We also recently started drilling at the Karish site, which has a good chance between 36 and 77% of finding natural gas. At the same time, we are continuing our work on the development plan for Leviathan.”

Concluded Mr. Bartfeld, ”The refining segment and gas stations contributed NIS 669 million to our net profit in 2012. Our sale of our holdings in Delek US to date (14% in 2012 and an additional 16% last week) supports our long term strategy to focus on the supply of energy as our core activity. It also enables us to significantly further strengthen our balance sheet by lowering our debt levels. The free cash flow of these sales, amounting to NIS 2.4 billion, has already significantly contributed to our strong financial stability.”

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LNG World News Staff, March 24, 2013; Image: Delek