They beat the street
KOOR Industries Net Income Declined in 4th Quarter; But Operating Earnings Increased on Higher Sales & Exports
TEL AVIV, Israel--(BUSINESS WIRE)--March 26, 1998--
Export Sales Increased 20.7% in 1997; Board Declares Dividend
Revenues of Koor Industries Ltd. (NYSE:KOR) increased slightly to $844.1 million for the fourth quarter ended December 31, 1997, compared with $828.1 million during the same period in 1996, but fourth-quarter net income declined to $8.4 million in 1997 from $24.2 million in 1996. Earnings per diluted ordinary share were $0.56, or $0.11 per American Depositary Share for 1997's fourth quarter, compared with $1.53 per ordinary share ($0.31 per ADS) in 1996.
The company, Israel's largest and most profitable industrial group, attributed the decline largely to higher taxes during the period and an increase in minority holdings of its operations. Last year, Koor adopted a strategic plan to focus on its core businesses, primarily the export-oriented telecommunications, electronics and agrochemicals subsidiaries, which included divesting part of its holdings in other industries.
Fourth-quarter exports increased 12.8% during 1997, and Koor's income from operations rose 12.5% to $45.8 million from $40.8 million in the prior year. For the full year, exports and international activities were up 20.7% to a record $1.494 billion, compared with $1.238 billion in export sales for 1996.
For all of 1997, Koor reported sales of $3.565 billion, compared with $3.468 billion during the prior year. Net income was $138.0 million, down from the $177.9 million the company posted for 1996 when earnings included a capital gain of $21 million from Koor's share of the initial public offering of Tadiran Telecommunications Ltd. (Nasdaq:TTELF), a unit of 64%-owned Tadiran Ltd. (NYSE:TAD). On a per diluted share basis, Koor earned $8.75 or $1.75 per ADS for 1997, compared with 1996's $11.15 per diluted share or $2.23 per ADS. One Koor ordinary share is equal to five ADS's.
Koor's largest increase in international revenues and operating income came from the Makhteshim and Agan agrochemicals subsidiaries, which have become the world's leading producers of generic plant protection products. Makhteshim and Agan's products are manufactured at factories in Israel as well as through overseas operations in Argentina, Brazil, Greece and Spain.
Building and infrastructure materials activities were largely responsible for the decline in Koor's earnings during the fourth quarter and the full year, reflecting Israel's stagnant domestic economy. Last month, Koor announced it plans to sell half of its 50% interest in Mashav, which holds the shares of Nesher, Israel's sole manufacturer of cement.
In telecommunications and electronics, sales declined 2.1%, primarily reflecting the decrease in quantities as well as the expected but significant decline in selling prices to Israel's Bezeq, which is preparing for privatization. Despite lower sales to this still-government-controlled telephone company and some softness in Asian markets, both Tadiran and Telrad had significant increases in exports, stemming from growing demand for their commercial products overseas.
Management Commentary
Benjamin D. Gaon, president and chief executive officer, commented on the company's performance, saying: "Although we are not satisfied with 1997's results, we were prepared for a tough year and, therefore, we concentrated our activities on those parts of our businesses where we could continue to make good progress despite Israel's sluggish economy.
"As called for in our strategic plan -- and forecast a year ago
-- we aimed to increase our international activities substantially, and they now account for nearly 42% of sales," he said. "We are now targeting to reach nearly 60% by 2001," Mr. Gaon added, "and we believe that the acceptance of our high-technology-oriented products in global markets may enable Koor to reach that goal even sooner."
"We are also adding to our strength in telecommunications and electronics," Mr. Gaon noted, citing the company's recent announcement of plans to acquire at least 13.5% of the outstanding shares of ECI Telecom (Nasdaq: ECILF). ECI is a leader in the design, development, manufacture and marketing of digital telecommunications and data transmission systems which enable network operators to deliver more cost-effective services.
"By expanding activity and achievement where our opportunities and unique abilities stand to serve us best," Mr. Gaon stated, "Koor and its future leadership will be well-positioned for the next century. Koor can and must continue to play a key role in driving and capitalizing on our country's economic vitality, as well as the high commercial potential of a peaceful Middle East.
"In addition," Mr. Gaon concluded, "the financial and philosophical commitment of the Claridge group, our controlling shareholder, should position us well to emerge as a true 21st century multinational." Claridge owns 28% of Koor's ordinary shares and its chairman, Charles Bronfman, serves as Koor's board chairman. As announced last month, Jonathan Kolber, president of Claridge and currently executive vice chairman of Koor, will succeed Mr. Gaon when he retires as chief executive officer on July 1 of this year.
Dividend Declared
The Board of Directors has declared a dividend of NIS 1.80 (US $0.50) per share, which is NIS 0.36 (US $0.10) per ADS payable on May 5, 1998 to shareholders of record as of April 21, 1998. |
