Israel Corporation (TASE: ILCO) subsidiary Oil Refineries Ltd. (TASE:ORL) today published its financial report for the third quarter of 2008. The reports show many a slip between the top line and bottom line results. Although revenue doubled to $2.62 billion from $1.29 billion for the corresponding quarter of 2007, net profit fell 99.7% to $42,000 for the third quarter from $18 million for the corresponding quarter of 2007. Despite the plunge in profit, the company announced that it will distribute a $200 million dividend.
Refining revenue doubled to $2.5 billion for the third quarter from $1.23 billion for the corresponding quarter.
Financing expenses were partly responsible for the drop in profit. They rose to $51.5 million for the third quarter from $21 million for the corresponding quarter. The company also recorded a loss of $69 million on the reduction in value of un-hedged inventory.
Oil Refineries CEO Mordechai Ben-Shach told "Globes", "Oil Refineries' policy is not to hedge its operating inventory, which amounts to 600,000 tons. This benefits us when prices rise, but hurts us when prices fall. It's important to note that this affects our books but not our cash flow. We believe that oil prices will continue to fall during the fourth quarter, which will cause us an additional net loss of $74 million for the quarter."
Oil Refineries minority shareholder Israel Petrochemical Enterprises Ltd. (TASE:PTCH) today posted a net loss of NIS 14.7 million, while its shareholders' equity fell by NIS 166 million. The holding in Oil Refineries was responsible for the low net loss but large drop in shareholders' equity, because Petrochemical Enterprises lists the company as a temporary financial asset for sale.
Petrochemical Enterprises listed the value of its Oil Refineries' holding at NIS 790 million at the end of June, and the value fell 18% during the third quarter, resulting in a loss of NIS 139 million
Published by Globes [online], Israel business news - www.globes-online.com - on November 24, 2008
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