Israel Petrochemical Enterprises Ltd. (TASE:PTCH) today published its financial report for the third quarter of 2007, which confirmed the profit warning it issued earlier this month. The third quarter was atypical since the company announced in advance that it had not exploited its production capacity in full, and that its results would be weighed down by heavy financing costs. The company posted a net loss of NIS 14.4 million for the third quarter.
Petrochemical Enterprises also posted a loss for the second quarter, albeit marginal, because of the suspension of the company's expansion program. It also suffered a more serious setback during the third quarter in 2006 because Katushya rocket attacks during the Second Lebanon War forced the company to suspend production, rending comparisons between the third quarter and the corresponding quarter largely meaningless.
Petrochemical Enterprises posted NIS 347.2 million revenue for the third quarter, 95.6% more than for the corresponding quarter. Cost of sales totaled NIS 296.6 million, leaving a gross margin of 14.6%, compared with a gross margin of 13.6% in the preceding quarter (the company's operations were shut down during the corresponding quarter because of the war). Operating profit totaled NIS 29.2 million (8.4% of revenue). Financing costs rose to NIS 57 million from NIS 3.9 million, due to the 2.5% increase in the Consumer Price Index (CPI) during the quarter, as well as the issue of debt.
Petrochemical Enterprises has still not been able to obtain its control permit for Oil Refineries Ltd. (TASE:ORL) because of regulatory problems related to its partner in its share in the controlling core, Switzerland's Glencore International AG. The company aims to become a holding company in the petrochemicals industry, acquiring a large stake in Avgol Nonwoven Industries Ltd. (TASE:AVGL), among other steps towards this goal. The company and Oil Refineries also own Carmel Olefins Ltd. in equal shares.
Published by Globes [online], Israel business news - www.globes-online.com - on November 19, 2007
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