Shikun u'Binui Holdings Ltd. (TASE: SKBN), controlled by Shari Arison, reported higher revenue and profits, despite a 21% drop in apartment sales in the first quarter of 2012 compared with the corresponding quarter of 2011. The company, Israel's largest residential contractor, is considered a barometer of the real estate market.
Shikun u'Binui sold 187 apartments during the first quarter, down from 287 apartments sold during the corresponding quarter, and the average sale price fell 2.1% to NIS 1.39 million from NIS 1.42 million. New home sales fell 23% to NIS 260 million for the first quarter from NIS 338 million for the corresponding quarter.
However, the company's infrastructures contracting work through Shikun u'Binui Solel Boneh Building and Infrastructure Ltd. and Solel Boneh International Ltd. boosted consolidated revenue 28.5% to NIS 1.71 billion for the first quarter from NIS 1.33 billion for the corresponding quarter. The company initiated projects in new countries, such as Tanzania, and expanded projects in Israel. Shikun u'Binui also expanded its renewable energy and desalination operations in Israel, more than offsetting the drop in revenue from residential construction.
Operating profit rose 8.7% to NIS 263.3 million for the first quarter from NIS 242.2 million for the corresponding quarter, and net profit rose 36% to NIS 166.4 million (NIS 0.40 per share) from NIS 122 million. The company will distribute a NIS 65 million dividend.
Shikun u'Binui said, "The residential sector clearly shows further increase in housing inventory, especially in private construction. Home sales have fallen, while housing starts are up."
Shikun u'Binui's share price rose 2.5% by mid-afternoon to NIS 6.14, giving a market cap of NIS 2.4 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on May 28, 2012
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