Infrastructure and Real Estate Company
Housing and Construction
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It reports that revenues in the fourth quarter of 2021 amounted to NIS 1.594 billion, a decrease of 9.1% compared to NIS 1.754 billion in the corresponding quarter in 2020. Operating profit was hit at a much higher rate, of 42%, and thus dropped from NIS 173 million at the time to about NIS 100 million this time.
The decline in the top line was mainly attributed to the delay in starting projects and ending the toll road project in Texas between periods, the company explained. The provision for the impairment of Alcon’s fixed assets, in the amount of NIS 82 million in the annual reports, affected the operating profit. It should be noted that the decrease is despite an 11% saving in administrative and general expenses due to a decrease in tender expenses.
Even before that, it was the gross profit margin for the quarter that dropped to 15.1% of revenue compared to 19.2% a year earlier. Thus, the gross profit itself decreased to NIS 240.1 million, 29% lower than NIS 337 million in the corresponding period. The company explained that the decline is mainly due to provisions made in the annual report for loss due to halting jobs in Kenya, losses in Tanzania and a decline in the average dollar exchange rate.
Segmented by areas of activity, it was reported that in the residential real estate sector in Israel during the quarter, 241 contracts were signed at an average price of NIS 2.2 million for the sale of apartments, compared with 142 at an average price of NIS 1.69 million in the corresponding quarter last year (excluding partners). NIS 220 million, compared with NIS 395 million in the corresponding quarter last year – in which they recognized revenues of NIS 100 million from the sale of a plot in Givat Shmuel.
In European real estate during the quarter, about 344 contracts were signed for the sale of housing units at an average price of NIS 0.69 million, compared with 200 contracts at an average price of NIS 0.6 million in the corresponding quarter last year (excluding some partners). NIS million, compared with NIS 44.7 million in the corresponding quarter.
In the infrastructure sector in Israel, revenues in the quarter amounted to NIS 913.8 million, compared with NIS 814.7 million in the corresponding quarter last year. Most of the change is due to an increase in construction and foundation activity. Gross profit was NIS 100.8 million compared to NIS 66.8 million last year. Approval of additional works by work clients. Operating profit for the quarter was NIS 70.5 million, compared with NIS 32.9 million in the corresponding quarter last year.
In the infrastructure activity in Africa and other regions, revenues in the quarter amounted to NIS 252.3 million, compared with NIS 305 million last year when the decrease was for the reasons mentioned earlier. Gross profit for the quarter amounted to NIS 38.9 million, compared with NIS 94.3 million in the corresponding quarter last year. The gross profit is mainly due to claims approved in an agreed mediation process with the Kenyan government in the corresponding quarter, and the operating profit in the quarter amounted to NIS 26.3 million, compared with NIS 94.9 million in the corresponding quarter last year.
In the field of infrastructure in the United States, revenues in the quarter amounted to NIS 165.6 million, compared with NIS 144.7 million in the corresponding quarter last year. Most of the increase in revenues is due to the start of the flood diversion project in Fargo. NIS 9.2 million in the corresponding quarter last year, which then resulted from the toll roads project in Texas, which is currently active and is in final completion prior to its delivery to the client, say Housing and Construction.
In the energy sector, revenues in the quarter amounted to NIS 18.8 million, compared with NIS 11 million in the corresponding quarter, mainly due to the expansion of the volume of activity in the field of electricity supply. Operating profit for the quarter amounted to NIS 15.3 million, compared with a loss of NIS 11 million in the corresponding quarter. The change is mainly due to an increase of about NIS 39 million in profits from affiliated companies.
In the field of franchising in the fourth quarter, revenue was recorded in the amount of NIS 82.5 million, compared with NIS 80.4 million in the corresponding quarter, as a result of the improvement in the operator’s revenue (which operates Highway 6 through the company Derech Eretz). Gross profit for the quarter amounted to NIS 25.2 million, compared with NIS 24.8 million in the corresponding quarter last year.
The company’s share in the profits of affiliated companies in the fourth quarter amounted to NIS 6.3 million, compared with a loss of NIS 39.4 million in the corresponding quarter, mainly as a result of the profits of the Ramat Hovav power plant partnership purchased from the IEC.
Net financing costs in the quarter increased to NIS 91.6 million from NIS 3.4 million in the corresponding quarter. Most of the increase is due to an increase in the volume of credit and the change in the consumer price index, as well as the weakening of the Colombian peso against the dollar, it was explained.
In the bottom line, Shikun VeBinui posted a loss of NIS 42.3 million in the quarter, in excess of NIS 120.8 million at the time. The cash flow from operating activities for the quarter amounted to NIS 790.7 million.
The company’s backlog of infrastructure and construction contracts amounted to NIS 19.7 billion at the end of 2021, of which NIS 6.5 billion was for operations abroad, compared with NIS 12.1 billion at the end of 2020.
Tamir Cohen, Chairman and CEO of Shikun VeBinui, said: “We continue to take the necessary steps, including renouncing loss-making activities, continuing to exit unprofitable countries in Africa, focusing on national infrastructure projects in the US market and continuing to develop and improve our quality land to provide value to investors. And are confident in our ability to successfully implement the strategic plan as determined by the Board of Directors.
Amit Birman, Deputy CEO and Chief Financial Officer: “The U.S. infrastructure market is a significant growth engine for us and today after much experience gained, Housing and Construction USA is a local American player with experience and reputation. The potential in the US infrastructure industry is significant and we are preparing to further increase the scope of activity. About two weeks ago we won a PPP mega-project of nine bridges in Pennsylvania, a win that comes in the wake of the financial closure for another PPP mega-project of diverting floodwaters in Fargo. We will continue to compete on projects in which our relative advantage is found, in Israel and abroad, and we will continue to translate our quality backlog into sales and profit. ”