Paz Oil Company Ltd. Presents Full Year 2018 Financial Results

YAKUM, Israel, March 28, 2019 /PRNewswire/ -- Paz Oil Company Ltd. (TASE: PZOL), Israel's leading Energy and Retail Group and a supplier of a third of Israel's fuel products, today reported its consolidated results for the fourth quarter and year ended December 31, 2018.

2018 Financial Highlights

• Adjusted EBITDA of NIS 1 billion;
• Adjusted net income of NIS 427 million;
• Paz Ashdod Refinery GRM above the benchmark refining margins;
• 60% of adjusted operating income from the Retail and Wholesale segment;
• Consistent 6% year-over-year revenue growth of the Yellow convenience store chain to NIS 892 million
• NIS 280 million dividend declared, representing a 5% dividend yield

Management Comment

Yona Fogel, CEO of Paz Group Commented: "The net income of Paz Group totaled NIS 401 million and the Company's Board of Directors approved a dividend of NIS 280 million, in accordance with our dividend policy of sharing 70% of our annual net income with our shareholders. Our 2018 results stand out particularly given the challenging business environment in the refining sector, especially in the fourth quarter of 2018. Nevertheless, the low gasoline margins in the refining segment were partially offset by a diversification of our sales in other segments, synergistic activity and our financial strength."

"The retail segment maintain profits due to a 2% increase in the quantity of kiloliters sold at Paz public filling stations compared to 2017, as well as growth in the revenues from Yellow and rental income from retail complexes and improved profitability of the wholesale sector. In addition, we are investing in new facilities in the Paz Ashdod Refinery which will improve its yield. Lastly, as part of finalizing our long-term strategic plan, and with the intention of expanding our operations to activities unrelated to transportation fuels, we plan to significantly increase investments in projects that are expected to make a material contribution over time."

Main Highlights of the Results

The Company's adjusted net income totaled NIS 427 million in 2018 compared to NIS 497 million in 2017. The Company's adjusted EBITDA totaled NIS 1.03 billion in 2018 similar to last year.

The adjusted net income for Q4/2018 totaled NIS 75 million compared to NIS 137 million in Q4/2017. The decrease is mainly due to the financial income recorded in Q4/2017 amounting to NIS 60 million, due to the sale of Paz's holdings in a joint venture, Shufersal Finances in that quarter. The adjusted EBITDA for Q4/2018 totaled NIS 224 million, a slight decrease compared to Q4/2017 which totaled NIS 234 million.

Paz Group equity attributable to shareholders totaled NIS 4.12 billion as of December 31, 2018 and its cash flow from operating activities totaled NIS 1.15 billion for FY/2018.

Retail and Wholesale Segment

Operating income for the Retail and Wholesale segment in FY/2018 totaled NIS 412 million similar to that of 2017 despite the reduction of the regulated gasoline marketing margin in May 2018. The revenues from Yellow demonstrated another quarter of growth, which contributed to the annual sales NIS 892 million in 2018, representing a 6% growth compared to 2017.

The update of the regulated gasoline marketing margin in May 2018 caused a decrease in the operating income of the segment, which totaled NIS 89 million in Q4/2018 compared to NIS 94 million in Q4/2017. Following actions which the Company took, the impact was mitigated, reducing the decrease of 4.7 agurot (0.047 New Israeli shekels) per liter to less than 2 agurot per liter. Additionally, the fourth quarter was impacted by an increase in advertising expenses invested in launching the new Yellow app service which will serve as a platform to expand Paz Group's retail operations.

Refining Segment

The adjusted operating income of the Refining segment totaled NIS 130 million in FY/2018 compared to NIS 157 million in FY/2017.

The decrease was primarily due to the decrease in refining margins, especially in Q4/2018 due to the sharp decline in gasoline margins. The Paz Ashdod adjusted gross refining margin in FY/2018 was $7.5/barrel and represents a premium of $3.1/barrel compared to the benchmark KBC refining margin which was $4.4/barrel.

The adjusted EBITDA for the refining segment totaled NIS 338 million in FY/2018, a slight decline compared to FY/2017 which totaled NIS 347 million.

Industries and Services Segment

The Industries and Services segment operating income was NIS 194 million in FY/2018 compared to NIS 206 million in FY/2017. In Q4/2018 the operating income totaled NIS 59 million, a 23% increase compared to Q4/2017 which totaled NIS 49 million. The growth in Q4/2018 was primarily due to the changes in the weather which positively impacted Pazgas. In Q4/2017 the temperatures where relatively higher during the winter months while in Q4/2018 the temperatures were relatively lower, and as such, there was an increase in the use of Liquefied Petroleum Gas (LPG) for heating.

The information presented in this press release is presented solely for the convenience of the reader and does not constitute a basis for making any investment decisions or any recommendation or opinion nor is it a substitute for the exercise of judgment by an investor or a potential investor. This press release is presented in a condensed format only and in order to receive a full picture of the Company's operations, the reader is referred to the Company's full reports as submitted to the Securities Authority and to the Stock Exchange.

The Company has included in this press release forward-looking information, as defined in the Securities Law, 1968, in relation to itself and to its investees. Inter alia, such information contains forecasts, objectives, evaluations and estimates, which relate to future events or matters, whose realization is not certain and which are not under the Company's control. Forward-looking information does not constitute a proven fact and it is based solely on the Company's subjective evaluations. When making such assumptions, the Company relied, inter alia, on the analysis of general information available to it at the time of preparing this report, including publicly available information, research work and surveys, which did not contain a commitment as to the correctness or the completeness of the information therein and whose correctness has not been independently tested by the Company. In addition, the realization and/or the non-realization of the forward-looking information will be affected by factors that cannot be evaluated in advance and which are not under the Company's control, including the specific risk factors underlying the Company's operations, as detailed in the periodic report, as well as developments in the general environment and in external factors that affect the Company's operations. Accordingly, even though the Company believes that its expectations, as they appear in this press release, are reasonable, there can be no certainty that the Company's actual results in the future will be in accordance with said expectations, but rather, they may differ from the expectations presented in the forward-looking information presented in this report.

Contact Information:

Omri Arens
Investor Relations and Credit Risk Manager, Finance Division
Paz Oil Company, Ltd.
Office: +972-9-8930656   
[email protected]

SOURCE Paz Oil Company, Ltd.

Related Links

https://www.paz.co.il