Shikun & Binui’s Operating Profit Plunges 70% Despite 70% Surge in Net Profit in Q2

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.