It’s not every day that the Tel Aviv Stock Exchange reacts with such force, in a stock that is considered one of the most popular in the market. stock Tadiran Group under the control and management Moshe Mamrod, plunged on Sunday by about 18% and the company wrote off NIS 750 million from its value, after publishing its financial results for the third quarter. The stock also gathered an unusual trading turnover of NIS 43 million, more than 5 times the daily average for the past six months.
● Tadiran’s energy activity is increasing, and it reported record revenues in the first half
● “Strong momentum”: the Israeli on Wall Street that is profiting from the energy crisis in Europe
Tadiran Group traditionally operates in the field of importing and selling air conditioners, while in recent years the company has worked vigorously to expand its activities in the fields of selling products for the field of renewable energy. The company concluded the third quarter with a 51% jump in revenue to NIS 602 million, but its gross profit rate sharply eroded from a level of 24.4% in the third quarter of last year to 17.5% in the past quarter.
Tadiran, whose commercial airing with actor Morgan Freeman claims to “control the weather”, explains that the decrease in the gross profit rate was due, among other things, to a decrease in profitability in the consumer goods sector (air conditioners), which was mainly due to an increase in storage costs following the company’s preparation and early stocking for the summer months, as well as the increase in procurement and transportation costs , “against the background of the global supply crisis and due to the favorable weather that prevailed during the summer this year, which caused a decrease in sales of air conditioning products compared to the corresponding period last year.”
She also notes the increase in the proportion of the energy sector’s activity in the group’s total activity, which rose to almost 54% compared to a proportion of about 27% in the corresponding period last year. (The energy sector is characterized by a lower gross profit rate than the consumer goods sector, although it has a similar operating profit rate) and a decrease in the gross profit rate at Tadiran Solar following the increase in procurement costs compared to the corresponding period last year.
An increase in sales and marketing expenses as well as management and general expenses led to a 7% decrease in the quarterly operating profit which was NIS 51 million. The net profit was NIS 37.1 million, a decrease of 4% compared to the corresponding quarter last year.
The profit rate in the operation of the air conditioners plunged
When you look at Tadiran Group’s results over the first nine months of the year, the damage to them is more moderate. The company closed the period with a 66% increase in revenues to NIS 1.79 billion, while the net profit attributable to shareholders in the period in question increased by 11.3% to NIS 116.5 million.
When the Tadiran Group’s activity sectors are segmented, it can be seen that the sectoral profit rate in the field of consumer goods, i.e. mainly the sale of air conditioners in Israel, plunged in the third quarter from 15.2% to 7.6%. On the other hand, the energy sector recorded the same sectoral profitability rate in the third quarter as in the same period – 9.2% this year compared to 9% last year.
The company also stated that they absorbed some of the price increases in the consumer goods sector, and published an assessment according to which, as of the current date, “a gradual trend of an increase in the gross profit rate in the consumer goods sector is expected, starting next quarter.”
A factor in an institutional body joins this assessment. According to him, “Since there is a clear trend of a decrease in sea freight costs recently, I assume that we will see an improvement in Tadiran’s future results. However, as long as the weather is favorable, people will continue to buy less air conditioners, so this is expected to be the main factor that will affect the company’s results.”
Despite the sharp daily decline in Tadiran Group’s shares, it is considered as one of the favorites by investors in Tel Aviv. The return it generated in the last three years amounts to 240% and in the last 5 years to 380%. The company is considered an “outstanding” dividend division. For example, in March And in August of this year, it announced two cumulative distributions of profits amounting to NIS 73.4 million.
Moshe Mamrod, the CEO of the company and the controlling owner of the company, stated on the background of the publication of the reports that “during the year 2022, the group positioned itself as a major player in the energy storage market in Israel, when it entered into agreements for the supply of storage systems for a total amount of up to approximately 215 million dollars”, according to him , “The field of air conditioners was affected by the early preparation to deal with the global supply crisis along with a relatively favorable summer in terms of the weather.”