Paz profit grew by 14%, strong shekel weighed on Albad results
Paz benefited from an improvement in fuel margins and increased net profit by 14% for the quarter. Despite the strengthening of the shekel and a decrease in revenue, Albad recorded organic growth of 7% in original currencies, led by the European market.
The dollar played a significant role in the results of Albad, a manufacturer of non-woven fabrics used primarily for wet wipes. The company's revenue under the management of Yaakov Chen decreased by 8% for the quarter to 427 million shekels, and net profit fell by 17% to 21 million shekels. However, for the half-year, revenue dropped by 3% to 852 million shekels, while net profit rose by 10% to 40 million shekels. Despite the decline, much of the erosion stemmed from foreign currency fluctuations. The company's stock rose by 3%, reaching a market value of 614 million shekels, completing a 36% rise over the last year.
The company's CEO, Yaakov Chen, explained to investors that exchange rates had a major impact recently:
"The euro weakened against the shekel in the second quarter by 16%, which is very dramatic and significant. The dollar weakened even more, by almost 18%. Cumulatively for the half-year, the euro weakened by 10% and the dollar by 14%."
"There is no doubt that in the second quarter, there was an acceleration in the weakness of currencies against the shekel, which affects reports in shekels. While we are presenting a decrease in revenue compared to last year's record quarter, it is important to note that organically we grew by 7%. This means that in euros, dollars, and shekels for customers we sell to in the same original currency, we grew by 7%," Chen added.
According to Chen, the second quarter was the record quarter of the last three years in terms of growth in original currency, with Europe serving as the main engine, where the company grew by 9% in euros.
Paz increased net profit by 14% for the quarter, benefiting from an improvement in fuel margins.
The company recorded a net profit of 158 million shekels and revenue of about 4.7 billion shekels in the second quarter. The decrease in fuel quantities and food sales was offset by an improvement in profitability, while in the first half of the year, profit from current operations grew by 17% to 304 million shekels.
Paz Retail and Energy concluded the second quarter with a net profit of 158 million shekels—an increase of 14% compared to 139 million shekels in the corresponding period. EBITDA rose by 4% to 354 million shekels, as the company benefited mainly from improved profitability in the energy sector for transportation, which managed to offset the effects of the war, the timing of the Passover holiday, and weakness in gas activity.
Looking at the sectors of activity, the energy sector for transportation stood out positively with a 16% increase in EBITDA, despite a 10% decrease in fuel quantities sold, thanks to improved marketing margins and activity mix. In the food retail sector, a decrease in sales was recorded due to the timing of the Passover holiday and the effects of the war, but the company presented an operating profit margin of 9.3%—the highest in the sector's history. Conversely, Pazgaz recorded a decrease in profitability for the quarter following the rise in gas prices, although it showed an improvement in results for the half-year as a whole. Additionally, the electric charging activity continued to expand rapidly, with a 50% increase in sales and an expansion to 179 charging stations across the country.
The company announced a dividend distribution of 130 million shekels, while gross debt decreased by about 10% compared to the corresponding period, to 3.04 billion shekels.
In the first half of the year, Paz recorded a net profit of 321 million shekels, an increase of about 9% compared to the same period last year. Net profit from current operations, excluding one-time items, grew by about 17% to 304 million shekels.
