Gross profit was cut by 20% due to exogenous effects, financing expenses decreased, net profit was cut by 40% to 23 million compared to 39 in the corresponding quarter last year
Sales in the reporting period amounted to approximately NIS 757.7 million, an increase of approximately 11.8% compared to sales of approximately NIS 677.7 million in the corresponding period last year. In the third quarter of 2021, sales amounted to approximately NIS 259.6 million, compared with approximately NIS 260.4 million in the corresponding quarter last year. The increase in sales during the reporting period was due to all areas of the Group’s activity, among other things, against the background of perceived demand in the Group’s sales to retail stores and building materials stores, especially in the area of paint and finishing products. And the security situation that prevailed in May in the second quarter and the timing of the Tishrei holidays in the third quarter.
In the third quarter, the Group maintained the volume of its revenue turnover, despite the multiple holidays that occurred last September and the number of delivery days that were substantially smaller as a derivative of that in that quarter.
Gross profit in the reporting period amounted to NIS 267.1 million (35.3% of sales), similar to gross profit which amounted to NIS 267.5 million in the corresponding period last year. In the third quarter of 2021, gross profit amounted to NIS 85.4 million NIS (32.9% of sales), a decrease of approximately 19.4% compared to the gross profit in the corresponding quarter last year, which amounted to approximately NIS 105.9 million (40.7% of sales).
During the reporting period, the Group managed to maintain a similar gross profit for the corresponding period last year, mainly due to the increase in sales and despite the continuous abnormal increases from the beginning of the year in raw material costs used in the Group’s activities. Transportation and prices of the above raw materials, while throughout the previous year and especially in the third and fourth quarters of last year, this trend was reversed and there was a decrease in said costs.
In the third quarter, the gross profit compared to the corresponding quarter last year decreased due to the above effects, as well as the effect of a minority of the number of delivery days, which was significantly smaller in this quarter due to the timing of the Tishrei holidays.
The Group has worked and continues to reduce the significant effect of the said increases in raw material costs, which was partially offset by the noticeable decline in foreign exchange rates (dollar and euro) and even more so after the reporting date, including adjustments in selling prices of some of its products during the reporting period. Further adjustments as aforesaid in its various activities in order to further reduce the above effects on gross profit.
Operating profit in the reporting period amounted to approximately NIS 116.2 million (15.3% of revenues), a decrease of approximately 7.4% compared to approximately NIS 125.5 million (18.5% of revenues) in the corresponding period, and reflects a decrease of approximately 6% excluding Recording of expenses in respect of options for employees who were first registered during the second quarter last year.
In the third quarter of 2021, operating profit amounted to NIS 33.8 million (13.0% of sales), a decrease of 38.4% compared to NIS 54.8 million (21.1% of sales) in the corresponding quarter last year.
The decrease in operating profit and its rate during the reporting period and in the third quarter in particular, was mainly due to the change in gross profit and as a derivative of the change in sales.
The net profit in the reporting period amounted to NIS 82.4 million, of which NIS 71.7 million is attributable to the Company’s shareholders, compared with NIS 88.2 million, of which NIS 73.7 million is attributable to the Company’s shareholders. The net profit attributable to shareholders in the reporting period is similar to that in the corresponding period last year, excluding the recording of expenses in respect of employee options. NIS 39.2 million, of which NIS 32.1 million was attributed to the company’s shareholders. Net income attributable to shareholders decreased in the third quarter by approximately 28.1% compared with the corresponding quarter last year, mainly as a result of the decrease in operating income as described above.
As part of the approval of the reports for the third quarter of 2021, the Company’s Board of Directors decided to distribute a dividend to the Company’s shareholders in the total amount of NIS 5.8 million (NIS 0.045 per share), which constitutes 25% of the net dividend policy. Of the Company attributed to its shareholders in the third quarter of 2021.
During the reporting period, the company decided to establish a plant for the production of gypsum boards for construction through its subsidiary (100%) Carmit Mr. Peaks Ltd., with an estimated investment of approximately NIS 150 million, and in June the company completed the Acquisition of the full holdings of the minority, Kibbutzim Nir Oz and Nirim, in the subsidiary Nirlat Colors Ltd., in exchange for the allotment of shares by the company, which constituted approximately 13% of the issued and paid-up capital. Accordingly, Nirlat became a wholly owned subsidiary of the Company (100%) and the Company’s capital base increased. The shares allotted in this transaction, which are held by Kibbutzim Nir Oz and Nirim at a rate of approximately 9.88% and approximately 3.12% of the Company’s share capital, respectively (when there is a voting agreement between them), are blocked and subject to sale restrictions in accordance with the Securities Law. Income tax certificate received as part of the execution of this transaction.
At the end of October, the company signed an agreement to purchase the full SP activity from the Metzerfels Group, in exchange for NIS 150 million in cash. Expects to complete the transaction towards the end of the year.