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Record year for Scope Metal

12/03/07

From: TheMarker, 12 March 2007

Natan Sheva

 

 

Revenue surges 73% to over NIS 1 billion, and profit more than doubles to NIS 95.6 million.

 

The rise in prices for metals has enabled Scope Metal Trading and Technical Services Ltd. (TASE: SCOP), controlled by Chairman and General Manager Shmuel Shiloh and First Israel Mezzanine Fund (FIMI), to surpass the NIS 1 billion threshold in 2006. The company posted NIS 1.04 billion in revenue in 2006, 73% more than in 2005. Most of the growth was organic by business in Israel, together with international activity, especially in the United States, which contributed NIS 250 million in revenue. Net profit rose 128% to NIS 95.6 million.

 

Revenue growth for the fourth quarter was even stronger, at 90% compared with the corresponding quarter, to reach NIS 289 million. The surge in sales reached down all the way to the bottom line, boosting profitability. Operating profit totaled NIS 53.4 million (17.9% of sales), compared with NIS 18.9 million (12% of sales) for the corresponding quarter, an increase of 182%. Net profit more than quadrupled to NIS 33.2 million. 


Scope Metal specializes in trading in metals. The company specializes in the purchase of metals from international metal producers, such as Alcoa Inc. (NYSE: AA) and Alcan Inc. (NYSE; TSX: AL), and selling them to customers in Israel. The metals mainly include stainless steel, commercial and aviation aluminum, steel and steel alloys, titanium, copper, bronze, brass, lead, and nickel alloys, as well as engineering plastics. The company’s value comes from the services it provides its customers, in speed of delivery and availability of every possible metal. For this purpose, the company has a huge inventory, worth NIS 583 million, which exposes it to the risk of a fall in prices for metals, which has so far not happened.

 

Since the share’s low point in June 2006, the company’s market cap doubled to over NIS 1 billion, which has led to its inclusion in the Tel Aviv 100 Index. FIMI, run by CEO Yishay Davidi, which acquired a stake in the company less than a year for an investment of NIS 155 million, has made a subsequent paper profit of 86%.