Shikun & Binui Ltd. , a global construction and infrastructure company headquartered in Israel, reported its financial results for the first half and second quarter ended June 30, 2018.
Financial highlights for the 1st half of 2018:
- Revenues totaled ~NIS 2.7 billion, down 20% compared to the first half of 2017. The decrease reflected Solel Boneh's strong performance in 2017, due to the
Ashalim and Railroad Tracks projects, coupled with a decline during 2018 in the Company's international contracting activities (excluding the US), due to the
slowdown of its activities in Nigeria and Columbia and the completion of projects in Ghana and Togo.
- Gross Margin for the period was 12% compared with 11% during the parallel period of 2017. Gross Profit for the period totaled ~NIS 325 million, compared
with ~NIS 377 million for the first half of 2017.
- Net Profit for the first half of 2018 totaled ~NIS 203 million, compared with ~NIS 89 million for the first half of 2017. The increase reflected primarily a
~NIS 331 million pre-tax capital gain generated by the sale of the Portfolio (45% of the Company's holdings in Carmeltun and 40% of its holdings in North
Roads, see below).
- Cash flow from operations, excluding investments in land and rights offerings, was a negative ~NIS 494 million. Cash flow from operations including these
investments was negative ~NIS 906 million.
Income Statement highlights:
- Progress continues in expanding the Company's construction offerings: revenues for the first half of 2018 totaled ~NIS 1.6 billion.
- Acquisition of Menorah Izu Aharon Group: In February 2018, Solel Boneh completed the acquisition of the Menorah Izu Aharon Group, a privately-held
company that engages in the execution, construction and maintenance of complex electrical systems for lighting, railroad crossings, traffic control and other
applications. The company employs ~235 workers. The acquisition is in line with Shikun & Binui's strategy to expand its construction offerings and will be
complementary and synergistic to its other activities.
- Primary mega projects in process: Gilboa Pumped Storage, Ashalim Thermo Solar power plant, Tel Aviv Light Rail (Western Section), the Tze'elim, the
Southern Barrier, and others.
International Building and Infrastructure Contracting Activities (excluding the US)
- Total revenues for H1 2018: ~US$ 183 million ~NIS 643 million.
- In February 2018, the company signed an agreement to build a new airport in Uganda for ~USD 299 million.
- In August 2018, the company received notice of the approval of an expansion for the Shagamu-Ibadan Road project in Nigeria for ~USD 220 million.
- The company has decided to begin reporting its financial results according to the NAFEX exchange rate beginning in the second quarter of 2018, in light of
- Nigeria's announcement that it will cease publishing the NIFEX exchange rate beginning in January 2019. As a result, a goal has been established to reduce
the gap between the NIFEX and the NAFEX exchange rates, in light of the reduction in the flow of foreign currency by the Central Bank (339 as of
30/06/18). As a result, a loss of $5m from exchange rate differences was recorded in the second quarter
- In the second quarter a loss of US$ 16 m (NIS 59m) was recoded due to hedging activity in relation to a construction project in Uganda.
- Segment 1 of the Colombia Toll Roads Project is now moving into operation; completion of Segments 2 and 3 is expected to be delayed and negotiations are
currently underway to extend the work period. Regarding Segments 4 and 5, significant changes in the scope of the project may be required due to the
discovery of water springs along the original route. As a result of the delays, the project's funders have stopped allowing a further draw-down of funds until a
new plan has been approved for the slowdown of work activity. In 2017, a provision of ~USD 5 million was taken in respect of the project's expected loss, and
in the second quarter of 2018, another ~USD 5 million provision was taken.
- During the second quarter of 2018, the Company decided to act in order evaluate its indirect holdings in its consolidated company SBI International
Holdings AG, whether through a share deal and/or the sale of activities and/or assets (partially or in full). including the solicitation of appropriate offer, and
evaluating the potential impact of such activities. No decision has yet been made to sell the International Infrastructure and Construction Division, and there
is no certainty, at this stage, regarding the results of the evaluation and/or the feasibility, scope or terms of a deal. At this stage of the process, the process has
no effect on the Company's financial results.
US Building and Infrastructure Contracting Activities:
- Total revenues for H1 2018: ~NIS 242 million from construction of the SH-288 road project in Texas.
- Beginning from the first quarter of 2018, the results of the US Building and Infrastructure Contracting Activities division are presented s eparately in line
with Shikun & Binui's strategic processes.
About the Shikun & Binui Group
The Shikun & Binui Group is a global construction and infrastructure company that operates in Israel and internationally in seven segments: 1) infrastructure and construction contracting outside of Israel; 2) infrastructure and construction contracting within Israel; 3) real estate development within Israel; 4) real estate development outside of Israel; 5) renewable energy; 6) concessions; and 7) water. The Group's activities focus on large, highly complex projects carried out for entities in private and public sectors with a focus on sustainability.