Koor Industries Ltd. Results Declined in First Quarter; New President and New CFO Appointed
TEL AVIV, Israel--(BUSINESS WIRE)--May 26, 1998--
Exports Post Slight Increase As Israel's Recession Continues; Company Acting Aggressively on Strategic Plan to
Focus on Core Businesses
Koor Industries Ltd. (NYSE:KOR) announced today that it experienced declines in revenues and earnings for the first quarter ended March 31, 1998. Revenues for the first quarter were $834 million, down 7% from $897 million last year. Exports and international sales, however, rose 2.9% to $394 million from $383 million last year.
Koor, which is Israel's largest industrial holding company, reported that operating income was $53.6 million, compared with $78.8 million in 1997's first quarter. Net income was $11.2 million, compared with $59.4 million during last year's first quarter. Earnings per diluted share were $0.73 for this year's first period, compared with $3.68 a year ago. On a per-American Depositary Share basis, diluted earnings were $0.15 for the quarter this year compared with $0.74 in 1997's first period.
Agrochemical sales increased during the first quarter, growing 10.3% to $212 million at Mahkteshim-Agan, from 1997's $192 million. Operating profits were up 15.5%. While the company's Telecommunications and Electronics segment sales were $326 million, less than last year's $352 million, Tadiran -- Koor's largest subsidiary in this core business -- posted a solid earnings increase of $4.8 million, or 31%. Exports in this segment increased by 2.4%, with Telrad posting an increase of 38.4%. However, Telrad had a sharp decrease in domestic sales to Bezeq, the Israeli phone company, which resulted in a decline in operating income.
The recession also strongly affected Koor's Building and Infrastructure Materials segment, where first quarter sales in 1998 were $104 million versus $118 million a year ago. In Koor's other, non-core businesses, revenues were approximately $192 million in this year's first period compared with $235 million during 1997's first quarter.
Koor also announced the appointment of Danny Biran as president and Yossi Ben Shalom as chief financial officer effective July 1. As previously announced, Jonathan Kolber, Koor's executive vice chairman, will succeed Benjamin D. Gaon as CEO when Mr. Gaon retires on July 1.
Commenting on the results, Mr. Kolber said: "As the first quarter's results clearly show, the domestic recession, particularly the drastic reduction of Bezeq orders, had a strong negative impact on our operating results. However, we are taking this opportunity to effect a complex management transition and streamline Koor's portfolio of assets. We expect to complete this process by mid-year. We are already implementing the divestiture component of Koor's new strategic plan in a much more aggressive manner."
Mr. Kolber stated that capital gains from a series of recent divestitures, most of which occurred in April and May, are expected to result in additional net income for the second quarter. Among the transactions were the sale of Koor's stakes in Gvanim Cable Television Ltd., D.I.Y. Home Centers, and Shalon, a gas mask business. Koortrade, a wholly owned subsidiary, sold its 51% stake in Hornet, a trading company based in the Philippines. Mashav, owned jointly by Koor and Clal, also sold its 20.7% stake in Tambour, a paint manufacturing company. Koor's net capital gains from these transactions total approximately $55 million, or $3.40 per diluted share ($0.68 per diluted ADS), for the second quarter.
"These divestitures are an important component of our overall strategic plan at Koor. We announced our intention to sell peripheral non-core businesses and are pleased that this process is well under way. Additional sales are expected throughout 1998, enabling us to focus on businesses which offer the best chance to reach our 15% annual income growth target in the years ahead," Mr. Kolber said.
Koor took one-time write-offs, expenses and other provisions of nearly $14 million during the quarter. Mr. Kolber also noted cutbacks and layoffs of 110 employees at the company's United Steel Mills plant near Haifa, citing it as further evidence of what he termed, "the company's need to redirect our efforts to the higher-technology-intensive businesses which have access to and influence in world markets. These export-oriented businesses should enable us to build on Koor's past success and reach new milestones in our quest to enhance shareholder value." |
