Shikun & Binui’s Operating Profit Plunges 70% Despite 70% Surge in Net Profit in Q2
Translated & summarized from Globes by baba
Shikun & Binui’s operating profit fell 69% in Q2 2024 due to lower gross margins and revenues, but net profit rose 70% to 241 million shekels thanks to tax income from the sale of its energy unit. The company sold Shikun & Binui Energy for 4.45 billion shekels, significantly reducing debt and boosting capital gains. Its construction backlog also grew notably in Israel and the U.S.
The story in 6 lines · by baba
- Shikun & Binui’s Q2 operating profit dropped 69% to 84 million shekels amid lower gross margins.
- Net profit surged 70% to 241 million shekels due to 307 million shekels in tax income.
- Q2 revenues declined 4% to 2.3 billion shekels, affected by European deliveries and currency shifts.
- The company sold Shikun & Binui Energy for 4.45 billion shekels, reducing debt by over 5.5 billion shekels.
- Construction backlog rose by 900 million shekels in Q2, totaling 18.5 billion shekels, including 3 billion in the U.S.
- Residential construction backlog in Israel grew to 4.2 billion shekels from 3.4 billion shekels year-over-year.
Shikun & Binui, led by Amit Berman, reported a sharp 69% drop in operating profit to 84 million shekels in the second quarter of 2024, driven by a significant decline in gross profitability. Revenue slightly decreased by about 4% to 2.3 billion shekels in Q2, mainly due to lower residential deliveries in Europe and a weaker dollar exchange rate impacting foreign operations. Despite this, the company posted a 70% increase in net profit to 241 million shekels, primarily due to a one-time tax income of 307 million shekels linked to utilizing carried-forward losses from the anticipated sale of Shikun & Binui Energy shares.
For the first half of 2024, Shikun & Binui recorded a net loss of 123 million shekels compared to a net profit of 250 million shekels in the same period last year. Gross profit for H1 fell to 338 million shekels from 791 million shekels year-over-year. After the reporting period, the company finalized the sale of Shikun & Binui Energy to the Generation Infrastructure Fund for 4.45 billion shekels. The post-tax cash flow from this deal is expected to be between 2.7 and 2.9 billion shekels, significantly reducing the company’s solo debt to a negligible level. Capital gains after tax are projected at 1.6 to 1.8 billion shekels, with net consolidated debt expected to decrease by approximately 5.5 to 5.7 billion shekels.
Shikun & Binui’s construction backlog grew by about 900 million shekels in Q2, reaching 18.5 billion shekels by the end of June, including 3 billion shekels in the U.S. The residential construction backlog in Israel increased by 800 million shekels to 4.2 billion shekels compared to 3.4 billion shekels a year earlier. The company operates mainly in infrastructure, residential construction, and energy sectors.
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