Shikun & Binui's operating profit fell by 69%, but net profit jumped by 70%
A decrease in apartment deliveries in Europe and the weakening of the dollar led to a decline in Shikun & Binui's revenues to 2.3 billion shekels in the second quarter and a plunge in operating profit. Despite this, net profit jumped by 70% to 241 million shekels thanks to a significant tax benefit, and the contracting backlog reached a record 18.5 billion shekels.
Despite a slight decrease in revenue, which totaled 2.3 billion shekels in the second quarter, and a 69% plunge in operating profit to 84 million shekels against the backdrop of a sharp decline in gross profitability, Shikun & Binui, under the management of Amit Birman, still posted a 70% jump in net profit to 241 million shekels. The reason stems mainly from the recording of tax income of 307 million shekels in the past quarter, following the utilization of carried-forward losses against the profit expected from the sale of Shikun & Binui Energy shares. In the first half of the year, the company recorded a loss of 123 million shekels compared to a net profit of 250 million shekels last year.
Revenues of Shikun & Binui, which operates mainly in infrastructure, residential construction, and energy, decreased in the second quarter by about 4% to 2.3 billion shekels. Revenues for the half-year also eroded by a similar rate to about 4.4 billion shekels compared to the corresponding period last year. The company stated that the decrease in revenue stems mainly from a lower volume of apartment deliveries in Europe and the weakening of the dollar exchange rate, which affects the presentation of overseas results in shekels. Gross profit in the second quarter totaled 150 million shekels compared to 459 million shekels last year. Gross profit in the first half of the year totaled 338 million shekels compared to 791 million shekels last year.
As previously mentioned, after the balance sheet date, a deal was signed for the sale of Shikun & Binui Energy to the Generation infrastructure fund for 4.45 billion shekels. The expected after-tax cash flow from the deal totals 2.7-2.9 billion shekels and will significantly reduce the solo debt. The after-tax capital gain is expected to be 1.6-1.8 billion shekels, and the consolidated net debt is expected to decrease by approximately 5.5-5.7 billion shekels.
Shikun & Binui further reports that its contracting backlog grew during the quarter by about 900 million shekels, reaching 18.5 billion shekels as of the end of June, of which about 3 billion shekels are in the USA. The contracting backlog for residential construction in Israel grew during the quarter by about 800 million shekels to 4.2 billion shekels, compared to 3.4 billion shekels in the corresponding period last year.
