Koor 3rd Quarter Net Income Up 22.1%: Strong Gains in Agrochemicals & Electronics
TEL AVIV, Israel--(BUSINESS WIRE)--Nov. 26, 1997--
Export Growth Continues
Net income of Koor Industries Ltd. (NYSE:KOR) rose 22.1% during the third quarter of 1997, compared to the same period a year ago. The company, which is Israel's largest and most profitable industrial enterprise, said that the gains primarily came from increased revenues, especially exports, at its Makhteshim-Agan agrochemicals subsidiary and the Tadiran (NYSE:TAD) telecommunications and electronics unit.
For the third quarter ended September 30, 1997, sales increased 2.7% to $868.0 million, compared with $844.9 million for the same period of 1996. Operating income for the third quarter was $66.4 million, compared with $54.9 million last year. Koor's net income for the September 1997 quarter was $38.3 million, compared with $31.3 in the same period of 1996.
Koor's third-quarter earnings per ordinary share were $2.53, based on 15,129,600 weighted average shares outstanding, or $2.49 on a fully diluted basis. One year ago, the company's earnings per ordinary share were $2.07 on 15,167,300 weighted average shares outstanding, or $2.02 per fully diluted share. Earnings per American Depositary Share (ADS) were $0.51 for this year s third quarter and $0.41 one year ago. (Koor reports its results in Israeli shekels (NIS), providing U.S. dollar figures as convenience translations only. One Koor ordinary share is equal to five ADS's.) For the first nine months of 1997, Koor revenues were $2.735 billion, a 3.1% increase from $2.653 billion last year. Operating income was $234.7 million through September of this year, compared with $257.0 million a year ago. Net income for the three quarters was $130.4 million, or $8.58 per ordinary share ($8.21 fully diluted), compared to 1996 s $154.5 million, or $10.19 per share
($9.65 fully diluted). Nine-month earnings per ADS were $1.72 in 1997 and $2.04 last year. Management Commentary
Commenting on the results, Benjamin D. Gaon, president and chief executive officer, said: "Koor's overall improvement during the third quarter reflects the company's consistent emphasis on our strategic core businesses. The Makhteshim-Agan agrochemicals businesses had an especially outstanding quarter. Earnings grew more than three-fold on a 48% revenue gain, as we began to derive the benefits of our investments in Latin America and elsewhere. At the same time, Tadiran's strengthened operating and financial controls enabled earnings to increase by more than 75% on modest sales gains.
"These companies plus Telrad lead the way in penetrating non-Israeli markets," Mr. Gaon continued. "Koor's total export revenues increased by more than 26% between July and September and, for the first nine months of this year, our total exports were already well over a billion dollars." He stated that Tadiran and Telrad's emphasis on exports is "particularly important given the drastic decline in sales and prices to Bezeq, Israel's national telephone company."
Mr. Gaon noted that the focus on these core businesses and the company s building and infrastructure segment "reflects our strategic policy to withdraw gradually from non-synergistic businesses and to create equity alliances with strategic partners. Because these are ongoing activities," he pointed out, "we no longer view them as non-recurring items, but as an integral part of our business results."
During 1997's nine months, Koor derived other income of approximately $36 million, from divestitures and other transactions related to its food, electrical appliances, machine tool and encryption device businesses, as well as via equity investments made in Telrad by Northern Telecom and Tadiran Information Systems by IBM. During 1996, other income totaled approximately $37 million, primarily reflecting a second-quarter capital gain via an initial public offering in the United States of shares of Tadiran Telecommunications (Nasdaq: TTELF).
In assessing the outlook for the remainder of 1997, Mr. Gaon said: "We believe that Koor's improvements this year are significant in light of business conditions in Israel, which remain adversely affected by the economic repercussions of political uncertainty. Israel's gross domestic product, which has averaged 6% annually throughout most of this decade, has recently fallen to nearly 2%, impacting construction, infrastructure development, and tourism.
"Meanwhile," he concluded, "we have increased our concentration on our technology- and export-oriented strategy. This approach enables Koor to focus with greater intensity on our globalization efforts and find new ways to maximize the returns to our shareholders around the world."
Shareholder and Board Developments
The company's quarterly review also detailed the composition of its shareholders subsequent to the October 20, 1997 exercise of an option to purchase the remaining 10.22% of Shamrock Group's shares of Koor by the Claridge Group. As of the end of October, Claridge owns 24.7%; Bank Hapoalim 22.7%; Bank Leumi 6.1%; Telrad Holdings 1.0% and the public 45.5%.
On November 12, following resignation of the Shamrock Group representatives, the following directors were nominated with the recommendation of the Claridge Group: Charles R. Bronfman, Jonathan Kolber, Danny Biran, Andrew Hauptman, Samuel Minzberg, Eli Hurwitz and Uri Savir. Mr. Bronfman was appointed chairman and Mr. Kolber was appointed executive vice chairman. |
