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Report Date : |
24.08.2013 |
IDENTIFICATION DETAILS
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Name : |
DELTA - GALIL INDUSTRIES LIMITED |
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Registered Office : |
P.O. Box 137, Karmiel (2161002) P.O. Box 10265, Tel Aviv (6110102) 2 Kaufman Street Textile House Tel Aviv 6801294 |
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Country : |
Israel |
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Financials (as on) : |
31.12.2012 (Consolidated) |
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Date of Incorporation : |
09.06.1975 |
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Legal Form : |
Public Limited Company |
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Line of Business : |
Manufacturers, marketers, retailers and exporters of private label women’s lingerie and intimate apparel, seamless underwear, as well as socks, leisurewear, nightwear and active-wear for men, ladies, and children. |
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No. of Employees : |
1560 |
RATING & COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Status : |
Satisfactory |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
NOTES :
Any query related to this report can be made
on e-mail: infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – March 31st, 2013
|
Country Name |
Previous Rating (31.12.2012) |
Current Rating (31.03.2013) |
|
Israel |
A2 |
A2 |
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Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
ISRAEL - ECONOMIC OVERVIEW
Israel has a technologically advanced market economy. Its major imports include crude oil, grains, raw materials, and military equipment. Cut diamonds, high-technology equipment, and pharmaceuticals are among the leading exports. Israel usually posts sizable trade deficits, which are covered by tourism and other service exports, as well as significant foreign investment inflows. The global financial crisis of 2008-09 spurred a brief recession in Israel, but the country entered the crisis with solid fundamentals - following years of prudent fiscal policy and a resilient banking sector. The economy has recovered better than most advanced, comparably sized economies. In 2010, Israel formally acceded to the OECD. Israel's economy also has weathered the Arab Spring because strong trade ties outside the Middle East have insulated the economy from spillover effects. Natural gasfields discovered off Israel's coast during the past two years have brightened Israel''s energy security outlook. The Leviathan field was one of the world''s largest offshore natural gas finds this past decade, and production from the Tama field is expected to meet all of Israel''s natural gas demand beginning mid-2013. In mid-2011, public protests arose around income inequality and rising housing and commodity prices. The government formed committees to address some of the grievances but has maintained that it will not engage in deficit spending to satisfy populist demands.
Source
: CIA
DELTA - GALIL INDUSTRIES LTD.
Telephone 972 3 519 37 37; 519 37 44
972 4 990 36 36
Fax 972 3 519 37 05; 519 37 90
P.O. Box 137, KARMIEL (2161002)
P.O. Box 10265, TEL AVIV (6110102)
2 Kaufman Street
Textile House
TEL AVIV 6801294 ISRAEL
Originally incorporated as a private limited company under the name of DELTA TEXTILE LTD. and registered as such as per file No. 51-086339-2 on the 09.06.1975.
On the 30.08.1983 merged with GALIL INDUSTRIES AND DEVELOPMENT (NAHARIA) LTD., originally incorporated on the 20.03.1961 under the name MULLER TEXTILE LTD. (name changed on the 28.01.1981), registered as per file No. 52-002560-2. The merged entity has been operating as a public limited company since August 1982, following an Initial Public Offering and listing its shares for trade on the public on the Tel Aviv Stock Exchange.
Name changed to the present one on 21.02.1999.
On the 25.03.1999 issued American Depositary Shares ("ADS") on the NASDAQ Stock Exchange.
In March 2007, subject de-listed its ADS shares from NASDAQ and listed shares for trade on the American "International Prime OTCQX" stock market.
In view of the improvement in its financial results in 2011, in early 2012 it was reported that subject aims at re-enlisting to NASDAQ.
In February 2003 two wholly-owned subsidiaries were merged into subject: DELTA SOCKS LTD. (established 1981) and DELTA SPORTING LTD. (established in 1982).
In December 2007, TAG-LI LTD. and DELTA TEXTILE MARKETING LTD. were also fully merged into subject.
Authorized share capital NIS 36,000,000.00, divided into -
36,000,000 ordinary shares of NIS 1.00 each,
of which 25,984,131 shares amounting to NIS 25, 984,131.00 were issued.
1. GMM CAPITAL LLC., 50.2%, controlled by Isaac Dabah, of the USA,
2. Dov Lautman (via controlled companies), 10.3%,
3. CLAL INSURANCE HOLDINGS LTD., 8.7%; THE PHOENIX HOLDINGS, 4.7%; institutional investors,
4. STERLING MAKRO Investment Fund, managed by Isaac Dabah, 6.5%,
5. Shares are also traded on the Tel Aviv Stock Exchange (TASE) and on the American "International Prime OTCQX" stock market.
In August 2005, Isaac Dabah, via GMM CAPITAL, acquired SARA LEE shares (23%) in subject, for a sum of US$ 27.7 million.
In July 2007, Dov Lautman, shareholder No. 2 and founder of
subject, who thus far also controlled subject, sold the control in subject to
shareholder No. 1, Isaac Dabah (via GMM CAPITAL), selling 13.3% in
consideration of US$ 21.3 to
US$ 25 million (pending on subject's stock value by the end of 2008).
In May 2008, Dabah made a tender offer for further 5% of subject's shares.
According to an inteview with
Isaac Dabah in July 2012, subject intends
to re-issue shares on the Nasdaq in the following nex 2 years.
1. Noam Lautman, Chairman,
2. Isaac Dabah, General Manager,
3. Itzhak Weinstock,
4. Gideon Chitayat,
5. Israel Baum,
6. Shaul Ben-Zeev,
7. Ms. Tzipora Carmon,
8. Yehezkel Dovrat.
Subject, directly and through its
Sales in Israel comprise around 11% of all sales in 2012 (13.4% in 2011). 59% of sales are to the North America (62% in 2011).
Designing and development are carried out in Israel and the USA, manufacturing is carried out in the Middle East and the Far East, mainly via sub-contractors.
Also (through a fully owned
Marketing international brands based on concession from Puma, Keds, Nike, Fox, Disney, etc., as well as Kenneth Cole.
Main customers: WAL-MART (U.S.A), comprising some 13.2% of sales in 2012.
Other customers are leading retail chains, e.g. MARKS & SPENCER, TARGET, MARVYN'S, J.C.PENNEY, VICTORIA’S SECRET, KOHL'S, HEMA (of the Netherlands), and leading brands, e.g. Hugo Boss, Nike, Calvin Klein, Under Armour, Tommy Hilfiger, Spanx, Columbia Sportswear, etc.
Local concessionaires for intl. brands: Wilson, Converse, Maidenform, Tommy Hilfiger, Lucky, MLB, KN Karen Neuburger.
Among local suppliers: ZAMIR KNITTING, AVCO CHEMICALS, NILIT, CHEMIART, ADA LISS, SALINA INDS., SVAV OR, GROFIT PLASTICS, ARYOS MARKETING, B & E INTERNATIONAL, A. SHITZER, ALEXANDER MANKET, WORKER, REAL.TEX AGENCIES, etc.
Operating from headquarters, rented offices, on an area of 998 sq meters, in 2 Kaufman Street, Textile House, Tel Aviv, and from:
Offices, in 20 Hamelacha Street, Park Afek, Rosh Ha'ayin (the address you provided).
Owned facilities on leased area of 24,000 sq. meters (14,000 sq.m. built) and leased 7,500 sq. meters, in Caesarea, and in Industrial Zone, Karmiel.
Logistics and design centers, on leased built area of 9,440 sq. meters, in Industrial Park, Caesarea.
Plants in Jordan, Egypt, Thailand and Bulgaria; also having manufacturing subcontractors in Egypt, Bulgaria, Turkey, Central America and the Far East.
Offices and logistics centers in China, U.S.A, U.K., Europe (incl. shops and facilities of SCHIESSER in Germany, Czech Rep. & Slovakia) (all leased).
Having 9,040 employees in the whole DELTA GALIL Group as of end of 2012 (had 7,130 employees in end of 2011), of which 1,560 employees in Israel. The increase in employees is from inclusion of 600 employees of SCHIESSER.
In January 2010, December 2010 and April 2012 subject completed capital raises of NIS 113 million, NIS 98 million and NIS 192.3 million, respectively, by issuing bonds to the public through TASE.
In August 2013 subject raised NIS 178.54 million in bonds issue on the TASE.
In October 2012 subject's
Board appoved a self purchase of stocks up to US$ 2.5 million.
In
October 2012 subject's Board appoved a self purchase of stocks up to US$ 2.5
million.
US$
(thousands)
31.12.2012 30.06.2013
ASSETS
Current assets
Cash and cash equivalents 48,297 36,615
Customers 108,735 117,367
Inventories 150,309 159,890
Other debtors and assets 19,424 27,465
326,765 341,337
Non-current assets
Fixed assets, net 93,019 95,503
Intangible
assets, net 111,482 112,619
Other non-current assets 27,945 28,814
232,446 236,936
559,211 578,273
======= =======
LIABILITIES
Current liabilities 182,356 186,098
Non-current liabilities 99,056 101,350
Equity 277,799 290,825
559,211 578,273
======= ======
Current market value US$ 456.6 million.
Accrued orders as of 10.02.2013: US$ 151.7 million.
In
2011 and 2010, subject invested US$ 25 million in R&D.
In October 2010 subject sold a property in Naharia for US$ 24 million.
Subject is an “Approved Enterprise” and as such entitled for State support and tax relieves.
There are 24 charges for unlimited amounts registered on the company’s assets, in favor of the State of Israel, local and foreign banks (last charge placed November 1987).
Consolidated
Statement of Income
US$ (thousands)
Year
ended 31.12
2010 2011 2012
Sales 620,074 678,819 817,782
Gross profit 121,269 136,323 183,381
Operating income 31,066 39,661 74,838
Pre-tax income 23,249 32,584 66,006
Net income (loss) 21,182 27,575 56,977
======= ======= =======
The jump in sales in 2012 is attributed to the purchase of SCHIESSER of Germany.
Consolidated revenues for the first half of 2013 were US$ 461.6 million (37% increase compared to the parallel period in 2012), making a gross profit of
US$ 118.15 million, an operating profit of US$ 25.55 million, and a net profit of
US$ 15.5 million.
(100% unless otherwise stated)
DELTA GALIL USA INC., USA,
DELTA GALIL UK LIMITED., U.K.,
DELTA GALIL HOLLAND B.V., fully owns: THAI PROGRESS GARMENT CO. LTD. (in Thailand) CENTURY WEAR CORPORATION (WLL) (in Jordan), 50%, DELTA TEXTILE BULGARIA LTD. (in Bulgaria), DELTA TEXTILE (EGYPT) FREE ZONE S.A.E. (in Egypt), WUNDIES BANGLADESH LIMITED., DELTA TEXTILE UPPER EGYPT, 98%, DELTA GALIL HONG KONG LTD., DOMINION HOSIERY MILLS INC., DELTA GALIL LIMITED APPAREL (GUANGZHOU) CO. LTD.
DELTA TEXTILES (LONDON) LTD., fully owns: DELTA GALIL EUROPE LTD., DELTA GALIL TEXTILE GERMANY GMBH & CO. KG, SPORT SOCKS COMPANY (BELGUM) LTD., DELTA GALIL GERMANY GMBH, DELTA GALIL GERMANY GMBH.
SCHIESSER AG, holding 11 subsidiaries.
Bank Hapoalim Ltd., The Main Branch (No. 170), Tel Aviv.
Bank Leumi Le’Israel Ltd., Tel Aviv Central Branch (No. 800), Tel Aviv.
Union Bank of Israel Ltd., Tel Aviv Main Branch (No. 063), Tel Aviv.
Mizrahi Tefahot Bank Ltd., Tel Aviv Main Business Center Branch (No. 461), Tel Aviv.
Israel Discount Bank Ltd., Tel Aviv Main Branch (No. 010), Tel Aviv.
Mercantile Discount Bank Ltd., Main Business Branch (No. 720), Tel Aviv.
The First International Bank of Israel Ltd., Tel Aviv Main Branch (No. 046), Tel Aviv.
HSBC Bank, Tel Aviv Main Branch, Tel Aviv.
Nothing unfavorable learned.
Subject is the largest textile company in Israel. Estimated market share in the local sales of undergarments and socks is 10% - 30%. In the Mass Market in USA (estimated at US$ 6 billion) subject holds 5%, and in the "Upper Market" in USA and UK (estimated at US$ 5 billion US$ 6 billion) subject holds 6%.
Group holds some 50% of the branded undergarments market in Germany (via SCHIESSER)
In 2000 subject purchased all of assets of DOMINION HOSIERY MILLS INC., a Canadian socks manufacturer, for US$ 8.3 million.
Also in 2000 it completed the acquisition of WUNDIES INDUSTRIES INC., of the USA, in consideration of 6.8% of subject’s shares for WUNDIES.
In 2001 subject, via WUNDYES INDUSTRIES, acquired American INNER SECRETS, manufacturers of private label bras and other ladies intimate apparel, for US$ 55 million (85% in cash and 15% in shares).
In 2003, subject acquired 100% of AUBURN HOSIERY MILLS, an American socks manufacturer, for a sum of US$ 17 million.
In 2004, subject acquired BURLEN CORP., an American lingerie company, for a sum of US$ 50 million.
In
2007, Dov Lautman, subject's fuonder tiil then the controlling shareholder,
decided to pass the control to his partner in recent years, Isaac Dabah,
following deterioration in his health condition. Dabah startegy is leading
subject to new areas mainly concentrating on brands, less on private label (90%
of sales), and using his know-how in the American market.
Mr.
Dabah, over 30 years in the textile and apparel sectors, controls the GMM Fund,
an American investment fund held by the Dabah family, which also holds 15% in
HABAS, a large local entrpreneur and real estate company, as well as half of an
apparel retail chain GOODY's FAMILY CLOTHING, USA of 385 stores and other
global holdings in the textile business. In September 2008, Mr. Dabah also
replaced Aviram Lahav who retired, as subject’s General Manager.
Facing harsh competition from lower-cost production
countries, subject was forced to go through streamlining measures. During 2005
- 2007 it closed sewing plants and other manufacturing activities in Israel and
several abroad, shifting activities to
low labor cost countries. The process
continued during 2008, also in view of the crisis in world markets since mid
2008. Another strategic move was the closure of the direct operations in
England (leaving only marketing office), after the diminishing orders from
subject’s long standing main client Marks & Spencer (40% decrease in 2008
from 2007, from US$ 134 million to US$ 80 million). Subject will deliver its
goods FOB instead of FSV.
As a result of the re-organization it moved into profit in the 3rd quarter of 2009, ending with a net profit in 2009.
Subject was also facing the political turmoil in Egypt in early 2011, where its plant contributes some 11% of the Group’s sales. Subject’s General Manager Isaac Dabah said subject did not suffer damages (plant was closed for 4 days).
In
February 2008, subject obtained an exclusive concession to market underwear of
"Tommy Hilfiger" in the U.S.A and other world's markets, in a
contract estimated at US$ 10 million per year, and according to which subject
will manufacture market and manage the brand, as of August 2008.
In
March 2008, it was reported that “Victoria’s Secret” is narrowing its orders from
subject due to streamlining. 2009 sales “Victoria’s Secret” were affected by the economic
crisis, but in
In February 2009, subject completed the acquisition from local socks manufacturer GIBOR SPORT ACTIVE WEAR their socks manufacturing activities, including M&E in their Jordan and Turkey plants, for NIS 23.5 million + estimated NIS 14 million for inventory. The acquisition will turn subject to NIKE’s main socks supplier with estimated sales of US$ 21 million per annum.
In
June 2009 it was reported that subjet received the fanchise for NIKE underwear.
In
December 2009 it was reported that subject is in negotiations to acquire the
activities of an internationa brand, deal is valued at US$ 70 million, however
in June 2010 it was reported that the deal did not come through.
Subject reported that as part of its reorganization plan, some 100 employees were laid-off in Israel and UK during 2009 and 40 employees in the USA. It reported that in Q1 2010 it closed its socks activity in Jordan, laying-off 90 employees. The reduction in employees in 2010 was due to selling subject's plant in India (with 300 employees), and re-organization in its other plants.
Subject has been ongoing a re-organization, which includes unification of manufacturing plants and transfer to manufacturing plants in China and Bulgaria and layoffs. This includes a process of closing down the Karmiel facility ("International Intimate Apparel" Div. and the "Delta Socks" and “Tag-Li” Div.) on an area of 56,200 sq. meters, of which 24,000 sq. meters owned, and is presented in subject's B/S as 'assets for realization'.
In
January 2010 AUBURN HOSIERY MILLS INC was merged into DELTA GALIL USA
INC., as part of Group's
re-organization, followed by layoff of 40 employees.
During Q1 2010 subject sold its Indian subsidiary DELTA TEXTILE (INDIA) PTY. for US$ 2.3 million. Also in Q1 2010 subject closed its finishing line in Jordan.
In
2011 subject launched a new chain for kids apparel (“Delta Kids”), separately
from its existing retail chain. Subject intends to open some 40 stores untill
2015, and will invest NIS 20 million in the new chain. So far 14 stores were
opened.
In 2011 subject sold its headquarters premises property in 2 Kaufman St., Textile House, Tel Aviv, for US$ 3.5 million, and leased it back from the buyers.
In
June 2011 subject, via subsidiary DELTA USA, signed an agreement to acquire the
American branded women's Sleepwear activity, under the brand "KN Karen
Neuburger" for US$ 4 million. The acquisition does not include the
manufacturing activities, carried out by sub-contractors in the Far East.
In
June 2011 subject launched an advertising campaign for "Delta Israel"
with investment of NIS 2.5 million.
In
October 2011 it was revealed that subject is intending to acquire GLORIA
VANDERBILT (of the JONES Group) jeans manufacturer for US$ 350 million,
however, in January 2012 it was reported that the deal did not pull through.
In
May 2012 subject reported it signed an agreement to fully acquire SCHIESSER,
Germany's leading undergarment manufacturer (which was in Receivership), for € 68 million. Deal was
finalized in July 2012.
In July 2012 subject opened a
retail store in a CARREFOUR store in Georgia.
During Q2-Q3 2012subject moved its logistics center from Rosh Ha'ayin to Caesarea (offices to remain), with total investment (mostly by CAESAREA DEVELOPMENT CO. and rest by subject) of US$ 14 million.
In December 2012 it was
reported that subject acquired the children's undergarments brand
'LittleMissMatched' for several US million. In May 2013 it was reported that
subject intends to open a retail chain for the brand (2 stores to be opened in
near future, and to reach some 30 stores).
In January 2013 it was
reported that subject received the global representatives (developing,
manufacturing, marketing) of socks of 'Columbia Sportswear' brand.
In July 2013, ARGAMAN
INDUSTRIES (opertaing in the textile field)
reported it is negotiating the sale of part of the activities of its retail
stores (having 32 stores under the name "Lodzia Rotex") as well as
brand names, to subject.
Sales
by local Textile, Clothing and Fashion Industries have been experiencing
decrease in sales over the last years. The output by the local Textile
and Clothing industries in 2009 fell down by 13% from 2008. Some 60% of the textile
industry production is sold in the local market and the rest for export.
Most exports were the North American markets (some 50%), and the industries
suffered from the global economic crisis, mainly in the USA, as well as the
slow-down in local market. In 2010 sales for export of the Textile, Clothing
& Leather industries improved just slightly, with 3.5% increase from 2009,
however also due to global markets weakness in 2011 and 2012 fell again by 6.6%
and 6.7%, respectively, reaching US$ 808 million in 2012.
The
local industry has been in state of crisis in face of amounting import from
foreign competitors with cheaper production costs, forcing streamlining
process, plants closure, and mostly resulting in the shift of textile
manufacturing to low labor cost countries. There are around 14,000 employed in
the textile sector in some 130 plants. In order to deal with the situation, the
local textile industry diverted mainly to advanced technologies production,
niches and design aspects.
According
to reports from the end of 2012, total
revenues of the local fashion market are NIS 11 billion per annum. 40% of sales
are in the large fashion chains, 34% in other smaller chains, and the rest in
private shops.
According to the fashion
market survey, which monitors sales by the local fashion chains, 2012 marked
almost a freeze in revenues, with mere 0.7% increase from 2011. The data
reveals that in 2012 41 fashion chains (out of 72 chains with total of over
1,600 shops) noted decrease in sales of aparel and footwear.
The under garment sector in Israel is valued at NIS 1.95 billion in 2012 (a 5% increase from 2011). As of end of 2010, there were some 1,100 points of sale for under garment products, of which 510 of under garment retail chains (2 main players are subject and HAMASHBIR 365, holding 56.4% of market sales). In 2012, braziers and fitters are the main product - 48% of under garment sales, under ware 19%, sox and stockings 15%, sleep dressing 11% and undershirts 7%.
In 2012 import of under garment was of NIS 930 million (10% increase from 2011).
The local fashion market has been significantly influenced by the entrance of new international fashion players to the already highly competitive local market (GAP, H&M in 2009/2010, Forever 21 in 2011).
Sources in the local fashion branch, in recent period the branch re-entered stagnation, and drop in revenues. It is explained by several factors, including the present slow-down in local economy, and the fierce competition where the entrance of the strong international chains are dragging prices down but do not bring to expansion of the fashion market.
Good
for trade engagements.
Note: Since February 2013 Israel Post has started using a new area code method of 7 digits (the old method of 5 digits is no longer valid).
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs. 64.69 |
|
|
1 |
Rs. 100.80 |
|
Euro |
1 |
Rs. 86.30 |
INFORMATION DETAILS
|
Report
Prepared by : |
NIS |
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
-- |
NB |
New Business |
-- |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.