At the end of last week, non-woven fabric company Albaad Massuot Yitzhak Ltd. (TASE: ALBA) reported positive quarterly results, joining its competitor Avgol Nonwoven Industries Ltd. (TASE:AVGL), which published statements indicative of a similar trend a few days earlier. Overall, Albaad's quarterly profits jumped more than 80%, compared with the corresponding quarter last year, to NIS 16 million, while Avgol's rose fourfold, to $7 million.
Despite a relatively moderate increase in revenue, 3% for Albaad, to NIS 391 million, and 5% for Avgol, to $84 million, both companies' quarterly statements show a double-digit rise in operating profits and a substantial decrease in financing expenses, which were also reflected in the overall results. Investors have also expressed satisfaction from the results: Albaad's share jumped 5% on Thursday, after the financials were released, while Avgol's share saw a three-day rise of almost 6%, since its results were published. In 2016, the shares of both companies made double-digit jumps, AlBaad's shares have risen almost 20%, reflecting a market cap of NIS 450 million. Avgol's share has skyrocketed more than 40%, bringing the company to a peak market cap of over NIS 1.4 billion.
Avgol, controlled by British fund Ethemba Capital, is a manufacturer of non-woven fabric products used as raw material for the hygiene market - disposable baby diapers, disposable sanitary pads for women, adult diapers, disposable medical products, wet wipes and more. In addition, the company produces non-woven fabric for other sectors, including agriculture, furniture and construction.
Albaad, controlled by Moshav Massuot Yitzhak in southern Israel, produces and markets wet wipes, feminine hygiene products (tampons) and absorption products. The vast majority of its sales are made abroad. Clients are retail chains offering the products under a private label, companies selling it under their own label, and distribution companies selling to institutional clients.
Grant for Albaad's Dimona factory
In parallel to their routine operation, both companies have been engaged in building factories in Dimona for quite some time. Albaad's project hit the headlines last June, when the company reported a large-scale deviation in its investment in the factory's construction. The cost will apparently reach NIS 210 million, 30% more than authorized by the company's board for this project, which began in early 2014, with costs then estimated at NIS 160 million.
At the same time as it released, Albaad updated that it had received approval from the Investment Promotion Center of the Ministry of Industry, Trade and Labor for a grant constituting 20% of a NIS 150 million investment. As for the factory, Albaad Chairman Amnon Brodie said, "Its construction continues as planned, and the company expects to be able to begin the running-in period during the third quarter of this year."
In Avgol's financial statements, it reported that it had so far invested $15 million in its plant in Dimona, out of an estimated overall investment of $60 million. The company's board of directors authorized the building of this plant in September 2015 and Avgol estimates that production there will begin in the second quarter of 2017.
Published by Globes [online], Israel business news - www.globes-online.com - on August 15, 2016
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