Super-Sol’s operating profit for the second quarter of 2001 increased 16.5% compared to the second quarter last year to a record NIS 78 million
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Super-Sol Ltd. (NYSE symbol: SAE), Israel’s leading supermarket chain Friday (3 August) released financial statements for the second quarter ended June 30, 2001.
The Company’s revenues in the second quarter of 2001 reached a record NIS 1.61 billion, compared to NIS 1.50 billion in the second quarter last year – an increase of 7.4%. The increase in revenues resulted mainly from the contribution of new stores. Same store sales decreased by 5.4% during the quarter, compared to the same period last year, mainly as a result of the opening of new stores by the Company and by its competitors, and the continued slowdown of the Israeli economy. Furthermore, the Company’s sales were adversely affected by the timing of the Passover holiday. In 2001, Passover began on April 7, whereas in 2000 it began on April 19. As a result, part of the Passover sales for 2001 were included in the first quarter’s results and part were included in the results for the second quarter, while in 2000 most of the Company’s Passover sales were included in the second quarter results.
Gross margin was 26.8% for the quarter, compared to 25.8% for the same period last year. The improvement in the gross margin was mainly the result of the increase in the percentage of products distributed by the Company, sales of private label products, and improved category and inventory management.
Operating profit for the second quarter reached a record NIS 78 million, an increase of 16.5% compared to NIS 67 million in the same period last year. The operating margin increased to 4.9% compared to 4.5% last year.
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By GlobalDataEBITDA in the second quarter of 2001 reached a record NIS 124 million, an increase of 18.2% compared to NIS 105 million in the second quarter last year.
Financing income, net during the second quarter of 2001 was NIS 2 million, compared to financing income, net of NIS 4 million during the same period last year. The Company’s financing income, net during the second quarter this year and in the prior year was mainly due to the increase in the Consumer Price Index during these two quarters which resulted in financing income from the erosion of the excess of unlinked monetary liabilities over unlinked monetary assets, net.
The Company’s net profit for the second quarter reached a record NIS 50 million, an increase of 14.4% compared to NIS 43 million during the same quarter last year.
The Company’s fully-diluted earnings per share for the second quarter reached a record NIS 0.25 per share (or NIS 1.25 per ADR), an increase of 17.5% compared to NIS 0.21 per share (or NIS 1.06 per ADR) during the same period last year.
Commenting on the results, Super-Sol’s CEO, Mr. Amiaz Sagis said: “Super-Sol has continued its trend of improved financial results this quarter, as a result of our aggressive marketing program and improved efficiency in all our activities. This trend reinforces Super-Sol’s leadership position in the Israeli food retail sector.”
“During the second quarter of 2001, as part of the Company’s growth policy, the Company opened two new stores, bringing the total number of stores to 156. The two new stores are both in the Birkat Rachel format geared toward the ultra-orthodox sector: a 2,400 square meter store in Jerusalem and a 1,300 square meter store in El-Ad. The Company has thereby increased the number of stores dedicated to the ultra-orthodox sector from six at the beginning of the year to nine, a fact that demonstrates the Company’s strategy of increasing its market share in this important sector.
In addition to the investment in new stores, the Company is continuing with its accelerated store remodeling program and remodeled four stores during the first quarter, bringing the total number of stores remodeled this year to nine.”
Mr. Sagis also said: “I am pleased to report further advances in self-distribution and sales of our private label branded products, “Superclass”, during the second quarter. Self-distribution through the Company’s logistics center increased to 54% at the end of the second quarter, compared to 44% at the end of the second quarter last year. Sales of private label branded products rose to 6.3% of sales at the end of the quarter, compared to 3.9% at the end of the same quarter last year.”
Results of Operations for the Six Months Ended June 30, 2001
The Company’s revenues for the first six months of 2001 reached a record NIS 3.11 billion, an increase of 7.9% compared to NIS 2.88 billion in the same period last year. The increase in revenues resulted mainly from the contribution of new stores.
The Company’s same store sales decreased by 4.6% during the six month period compared to the same period last year, mainly as a result of the opening of new stores by the Company and by its competitors, and the continued slow-down of the Israeli economy.
Operating profit for the period reached a record NIS 152 million, an increase of 15.1% compared to NIS 132 million in the same period last year. Operating margin increased to 4.9% compared to 4.6% for the same period last year.
EBITDA for the first six months of 2001 reached a record NIS 242 million, an increase of 16.3%, compared to NIS 208 million in the same period last year.
During the first six months of the year, the Company recorded other expenses of NIS 1 million. During the first six months of 2000, other income included capital gains in the amount of NIS 11 million, mainly from the sale of a plot of land by a subsidiary. Other income fluctuates according to the timing of the sale of assets by the Company, which results in capital gains or losses.
Net profit for the first half of 2001 was NIS 90 million, an increase of 5.6% compared to NIS 85 million in the same period last year. Excluding the effect of capital gains and related taxes, the Company’s net profit increased 14.6% compared to the same period last year.
The Company’s fully-diluted earnings per share for the period were NIS 0.45 per share (or NIS 2.24 per ADR), an increase of 7.1% compared to NIS 0.42 per share (or NIS 2.09 per ADR) for the same period last year. Excluding the effect of capital gains and related taxes, the Company’s earnings per share increased 16.3% compared to the same period last year.
Super-Sol is Israel’s largest supermarket chain in terms of revenues. In the US, Super-Sol’s American Depositary Receipts, each equivalent to five ordinary shares, trade on the New York Stock Exchange under the symbol “SAE”. Prices may be accessed on Reuters with the symbol SAE.N, and the Reuters Equities 2000 Services, Quotron and Bloomberg under the symbol SAE.
The statements contained in this release which are not historical facts contain forward-looking information with respect to plans, projections, or future performance of the Company, the occurrence of which involve certain risks and uncertainties, including risk of market acceptance, the effect of economic conditions, the impact of competitive pricing, supply constraints, the effect of the Company’s accounting policies, as well as certain other risks and uncertainties which are detailed in the Company’s filings with the Securities and Exchange Commission, particularly the prospectus with respect to its public offering in October 1997.
Super-Sol Ltd.
Consolidated Balance Sheets
Adjusted New Israeli Shekels as of June 2001
(In millions)
Convenience
Translation
Into U.S. Dollars Adjusted NIS
June 30 June 30 December 31
2001 2001 2000
Unaudited Unaudited Audited
Assets
Current assets
Cash and cash equivalents 3 14 17
Marketable securities at market value 0 0 0
Trade receivables, net 137 569 542
Other current assets 13 54 57
Inventories 93 386 363
246 1,023 979
Investments and loans
Investments 6 26 31
Long-term loans and receivables 10 41 40
16 67 71
Fixed assets, net 566 2,359 2,296
Deferred expenses and other assets 21 89 81
Total assets 849 3,538 3,427
Liabilities and Shareholders’ Equity
Current liabilities
Short-term bank credits 22 90 68
Trade payables 213 887 880
Other payables 68 283 266
Proposed dividend 0 – 49
303 1,260 1,263
Long-term liabilities
Loans from banks and others 105 439 425
Accrued employee severance benefits, net 2 9 7
Deferred taxes 13 55 48
120 503 480
Shareholders’ equity 426 1,775 1,684
Total liabilities and shareholders’ equity 849 3,538 3,427
Super-Sol Ltd.
Consolidated Statements of Income
Adjusted New Israeli Shekels as of June 2001
(In millions, except per share data)
Convenience Translation
Into U.S. Dollars Adjusted NIS
Six Months Ended Six Months Ended Three Months Ended
June 30 June 30 June 30 June 30 June 30
2001 2001 2000 2001 2000
Unaudited Unaudited Unaudited Unaudited Unaudited
Revenues
Sales 739 3,079 2,857 1,596 1,489
Rental and operation of 8 33 26 16 13
shopping malls
747 3,112 2,883 1,612 1,502
Costs and expenses
Cost of sales 539 2,243 (a)2,103 1,168 (a)1,104
Operating, selling, 172 717 (a) 648 366 (a) 331
711 2,960 2,751 1,534 1,435
Operating profit 36 152 132 78 67
Other income
(expenses), net
Finance income (2) (8) (4) 2 4
(expenses), net
Sundry income (0) (1) 11 (1) (1)
(expenses), net
(2) (9) 7 1 3
Earnings before income 34 143 139 79 70
taxes
Income taxes 12 53 54 29 27
Net earnings 22 90 85 50 43
Earnings per share – 0.11 0.45 0.42 0.25 0.21
Earnings per NIS 0.1 par
value
(a) Reclassified
Super-Sol Ltd.
Consolidated Statements of Cash Flows
Adjusted New Israeli Shekels as of June 2001
(In millions)
Convenience Translation
Into U.S. Dollars Adjusted NIS
Six Months Ended Six Months Ended
June 30 June 30 June 30
2001 2001 2000
Unaudited Unaudited Unaudited
Cash flows from operating activities
Net earnings 22 90 85
Adjustments necessary to
reflect cash flows from 23 96 306
operating activities
45 186 391
Cash flows from investing activities
Purchase of fixed assets and other
assets, net (45) (186) (153)
Proceeds of marketable securities, net 0 0 56
Long term loans repaid, net 2 7 3
(43) (179) (94)
Cash flows from financing activities
Payment of loans, net 9 38 (25)
Exercise of stock options 0 1 2
Dividend paid (12) (49) (295)
(3) (10) (318)
Decrease in cash and cash equivalents (1) (3) (21)
Cash and cash equivalents at the
beginning of the 4 17 45
period
Cash and cash equivalents at the end
of the 3 14 24
period
Super-Sol Ltd.
Selected Operating Data
Adjusted NIS as of June 2001
Six Months Ended
June 30 June 30
2001 2000
Change in same store sales -4.6% -2.8%
Sales per square meter – NIS 9,017 20,764
No. of stores
at end of period 156 143
Total square meters
at end of period 340,700 289,600
Gross profit as a
Percentage of sales 27.2% (a) 26.4%
EBITDA (in millions) (1) 242 208
EBITDA margin (2) 7.8% 7.2%
Net earnings per share 0.45 0.42
Net earnings per ADR (3) 2.24 2.09
Ordinary shares outstanding(4) 205,345 204,048
EBITDA is defined as income before interest expense, sundry income
(expenses) net, income taxes, depreciation and amortization, and
minority interest.
EBITDA as a percentage of total revenue.
Determined by multiplying net earnings per Ordinary Share times
five.
Average amount for the period (in thousands).
(a) Reclassified
Three Months Ended Year Ended
June 30 June 30 December 31
2001 2000 2000
Change in same store sales -5.4% 5.1% -2.2%
Sales per square meter – NIS 4,636 5,194 19,580
No. of stores
at end of period 156 143 151
Total square meters
at end of period 340,700 289,600 331,600
Gross profit as a
Percentage of sales 26.8% (a)25.8% 26.8%
EBITDA (in millions) (1) 124 105 438
EBITDA margin (2) 7.7% 7.0% 7.4%
Net earnings per share 0.25 0.21 0.83
Net earnings per ADR (3) 1.25 1.06 4.14
Ordinary shares outstanding(4) 204,606 204,048 202,951
EBITDA is defined as income before interest expense, sundry income
(expenses) net, income taxes, depreciation and amortization, and
minority interest.
EBITDA as a percentage of total revenue.
Determined by multiplying net earnings per Ordinary Share times
five.
Average amount for the period (in thousands).
(a) Reclassified
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