Israel Post Q2 profit down as war depresses business

By Investor Empires On Aug 29, 2024

The Israel Postal Company’s financial statements for the second quarter show a rise in revenues, but a sharp decline in net profit. These are probably the last financial statements published by the Israel Postal Company, which continues to operate under the authority of state companies, as its privatization and sale to the Milgam-Phoenix-Lehman Schlussel consortium, which bought it in May, was completed.

The factor that negatively affected Israel Post’s second-quarter results was the war. The number of Israelis traveling abroad decreased, and therefore cash transfers at Israel Post branches, which is usually a profitable business for the company, decreased. The decrease in the number of flights to Israel also affected the profitability of the parcel service.

In May, the Israel Postal Company was privatized and sold for NIS 461 million, excluding debt, to a consortium headed by Milgam, owned by the Weil family, along with insurance company Phoenix and confectionery importer Lehman Schlussel. The company’s second-quarter revenues rose 3.5% to NIS 427 million. Revenues from the financial services segment, which includes interest income, rose 6% to NIS 150 million. Revenues from postal and commercial services rose just over 2.5% from the same quarter last year.

Operating profit decreased by 57% due to a sharp decline in other revenues and expenses (net) to NIS 74 million, down 47% from the previous quarter. This was due to a one-time provision for severance pay in the second quarter of this year.

Net profit fell by 68% to NIS 48 million, a figure that can be viewed in two ways. On the one hand, profitability has declined; on the other hand, before the aggressive recovery program that cost the state billions of shekels, Israel Post was losing a million shekels a day. The fact that the company made a profit is a final positive chord from the perspective of the state, which will no longer have to pump public money to save it.

After the end of the reporting period, the Israel Postal Company paid off NIS 300 million of the debt owed to the Chinese Postal Company, and another NIS 40 million is scheduled to be paid soon. This completes the debt repayment process, after NIS 100 million is paid in 2023.

“The results are the fruit of the efforts of thousands of dedicated workers, who transformed a company that was on the verge of bankruptcy just two years ago,” said Israel Post Chairman Michael Vaknin. “The revolution at Israel Post shows that things can be done differently, and how important it is to keep politics out of companies that belong to the public and whose job it is to serve the public.”

This article was published in Globes, Israeli Business News – en.globes.co.il – on August 29, 2024.