|
Report Date : |
09.10.2014 |
IDENTIFICATION DETAILS
|
Name : |
SHUFERSAL LTD. |
|
|
|
|
Formerly Known As : |
SUPER-SOL LTD |
|
|
|
|
Registered Office : |
|
|
|
|
|
Country : |
|
|
|
|
|
Date of Incorporation : |
14.01.1957 |
|
|
|
|
Legal Form : |
Private Limited Company |
|
|
|
|
Line of Business : |
Retail marketing chain, operating a nationwide supermarket chain. Subject sells food and non-food products, which includes
apparel, domestic electrical appliances, PC's and leisure products |
|
|
|
|
No. of Employees : |
12,100 |
RATING & COMMENTS
|
MIRA’s Rating : |
Ba |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
Status : |
Satisfactory |
|
Payment Behaviour : |
No complaints |
|
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 – June 1, 2014
|
Country Name |
Previous Rating (31.03.2014) |
Current Rating (01.06.2014) |
|
Israel |
A2 |
A2 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
|
Restricted |
C2 |
|
Off-credit |
D |
ISRAEL - ECONOMIC
OVERVIEW
Israel has a technologically
advanced market economy. Cut diamonds, high-technology equipment, and pharmaceuticals
are among the leading exports. Its major imports include crude oil, grains, raw
materials, and military equipment. Israel usually posts sizable trade deficits,
which are covered by tourism and other service exports, as well as significant
foreign investment inflows. Between 2004 and 2011, growth averaged nearly 5%
per year, led by exports. 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. 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. The economy has recovered
better than most advanced, comparably sized economies, but slowing demand
domestically and internationally, and a strong shekel, have reduced forecasts
for the next decade to the 3% level. Natural gas fields discovered off Israel's
coast since 2009 have brightened Israel's energy security outlook. The Tamar
and Leviathan fields were some of the world's largest offshore natural gas
finds this past decade. The massive Leviathan field is not due to come online
until 2018, but production from Tamar provided a one percentage point boost to
Israel's GDP in 2013 and is expected to contribute 0.5% growth in 2014. In
mid-2011, public protests arose around income inequality and rising housing and
commodity prices. Israel's income inequality and poverty rates are among the
highest of OECD countries and there is a broad perception among the public that
a small number of "tycoons" have a cartel-like grip over the major
parts of the economy. 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. In May 2013 the Israeli government, in a politically
difficult process, passed an austerity budget to reign in the deficit and
restore confidence in the government's fiscal position. Over the long term,
Israel faces structural issues, including low labor participation rates for its
fastest growing social segments - the ultra-orthodox and Arab-Israeli
communities. Also, Israel's progressive, globally competitive, knowledge-based
technology sector employs only 9% of the workforce, with the rest employed in
manufacturing and services - sectors which face downward wage pressures from
global competition
|
Source
: CIA |
SHUFERSAL LTD.
Telephone 972 3 948 15 15
Fax 972 3 948 09 17
P.O. Box 15103, Rishon Le-Zion (7505002) 30 Shmotkin Binyamin Street Old Industrial Zone
Rishon Le-Zion 7536333 Israel
Originally incorporated as
a private limited company, registered as per file
No. 51-015652-4 on the 14.01.1957. Operations started in 1958.
Converted into a public
limited company and registered as such as per file
No. 52-002273-
In 1980 published a prospectus offering shares to the public on the Tel Aviv Stock Exchange. Shares were also listed for trading on the New York Stock Exchange in 1997, and were de-listed on 26.12.2002.
Originally registered under the name SUPER-SOL LTD., which changed to the present name on the 04.03.2008.
On the 25.03.2009 the merger of CLUBMARKET MARKETING CHAINS LTD., then local 3rd largest marketing chain (which went bankrupt) into SHUFERSAL LTD. was completed.
Authorized share capital NIS 40,000,000.00, divided into -
400,000,000 ordinary shares of NIS 0.10 each,
of which 221,181,322 shares amounting to NIS 22,118,132.2 were issued.
1. DISCOUNT INVESTMENT CORP. LTD. (DIC), 47.13%, a public limited company whose shares are traded on the Tel Aviv Stock Exchange (TASE), controlled by IDB DEVELOPMENT CORPORATION LTD. (73.92%), publicly traded on TASE, controlled by Mordechai (Motti) Ben Moshe, 28.99% and Eduardo Elsztain, 28.99% (via DOLPHIN NETHERLANDS),
2. ISRALOM PROPERTIES LTD., 19.03%, fully controlled by Matthew Bronfman and Shalom (Yakov) Fisher,
3. CLAL INSURANCE HOLDINGS, 4.93%, an institutional investor,
4. Shares are also traded on the Tel Aviv Stock Exchange.
In March 2007 subject's main shareholder DIC signed an agreement with the BRONFMAN – FISCHER Group, according to which DIC will sell part of its holding - some 20% - to the BRONFMAN – FISCHER Group in consideration of US$ 214 million, in 2 phases. In September 2007 2nd phase concluded, in which DIC sold BRONFMAN – FISCHER Group 5.7% of the shares in subject and in total close to 19% in both phases. IDB Concern holds in practice over 50%.
IDB Concern (via IDB HOLDINGS), which held IDB DEVELOPMENT, became heavily indebted and faced problems in paying its bond holders. In December 2013 the Court approved a creditors' arrangement for IDB Group, in which ELSZTAIN-EXTRA Group will take over control. ELSZTAIN-EXTRA Group is comprised of businessmen Eduardo Elsztain of Argentine and Motty Ben-Moshe (who owns EXTRA Group). In April 2014 the debt arrangement was finally completed (see more in CHARACTER).
1. Rafael (Rafi) Bisker, Co-Chairman,
2. Shalom Yakov Fisher, Co-Chairman,
3. Isaac Idan,
4. Haim Gavrieli, General Manager of IDB Group,
5. Ron Hadassi,
6. Michael Bar Haim,
7. Ronen Zadok,
8 Avihu Olshanski,
9. Tsvi Ben Porat,
10. Aharon Adler,
11. Ms Sabina Biran,
12. Eldad Mizrahi,
13. Gideon Schurr,
14. Amiram Erel.
Itzhak Aberkohen.
A retail marketing chain, operating a nationwide supermarket chain.
Subject sells food and non-food products, which includes apparel, domestic electrical appliances, PC's and leisure products. In 2013 the non-food products categories including cosmetics personal care items etc. generated 16.9% of sales (was 15.4% in 2012).
Subject also sells its own private label brand (1,670 items under brands "Shufersal" and "Yesh", which comprise of some 10% of total sales).
Also (via subsidiary) dealing in yielding real estate, with overall area of 188,169,000 sq. meters (see more in CHARACTER).
Operating under 4 sales point formats (total of 284 supermarkets as of 30.6.14):
1. Small neighborhood supermarkets, branded "Shufersal Sheli",
2. Heavy discount stores, branded "Shufersal Deal",
3. Heavy discount stores, branded "Yesh",
4. Convenient stores branded "Shufersal Express",
Also operating Organic stores (9 stores within their supermarkets) branded "Organic Market", 18 drugstores (store in store format), and a sales channel via phone and Internet "Shufersal Online".
Note: subject is ongoing a streamlining and re-organization procedures, in which some 15 branches will be closed, as well as layoffs, etc. (see CHARACTER).
Largest suppliers: TNUVA (12.8% of purchase), STRAUSS GROUP (7.6%), OSEM (7.5%), UNILEVER ISRAEL, SANO, NETO, SCHESTOWITZ, DIPLOMAT, etc.
Among many other (non-consumer products) suppliers: DANZIV HANDLING SOLUTIONS, SALINA INDUSTRIES, BENDA PLAST INDUSTIRES, etc.
Operating from headquarters in 30 Shmotkin Street, Old Industrial Zone, Rishon Le-Zion, offices and logistics center on a built area of 28,700 sq. meters (100,000 sq. meters plot), owned by SHUFERSAL Group, and from a total of 284 branches nationwide as of 30.6.14 (had 281 stores in 31.12.13), on total stores area operated by subject of 554,000 sq. meters (of which some 130,000 sq. meters are owned). In addition, operating from warehouses and 5 logistic centers (incl. in Rishon Le-Zion).
Having some 12,100 employees (of which some 4,400 are temporary or man-power employees) serving SHUFERSAL Group. As noted, subject is ongoing a streamlining process in which layoffs are planned.
In November 2005, subject completed a NIS 500 million capital raise in a private placement of bonds.
In February 2007 subject issued bonds through TASE, raising NIS 500 million.
In August 2009, subject completed a NIS 500 million capital raise in a private placement of bonds.
In October 2013, subject completed a NIS 920 million capital raise issuing bonds.
In 2013 subject advertized in volume of NIS 51.5 million (compared to 40.8 million in 2012). In the first 6 months of 2014 subject advertized in volume of NIS 31.3 million.
There are 3 charges for unlimited amounts registered on the company's real estate property, in favor of a real estate & investment companies and Bank Leumi Le'Israel Ltd. (last 2 charges placed August-October 2012).
Consolidated B/S shows:
NIS (millions)
ASSETS 31.12.2013 30.06.2014
Current assets
Cash and cash equivalents 583 299
Deposits and financial assets 819 1,006
Customers 1,157 1,149
Other debtors 116 118
Other current assets 2 53
Stock
714 777
3,391 3,402
Non-current assets
Real estate for investment 416 416
Fixed assets 2,588 2,583
Intangible assets and prepaid expenses 806 808
Other non-current assets 77 126
3,887 3,933
7,278 7,335
===== =====
LIABILITIES
Current liabilities 2,367 3,062
Non-current liabilities 3,713 3,293
Equity 1,198 980
7,278 7,335
===== =====
Current market value
US$ 599.3 million.
REVENUES
Consolidated
Statements of Income
NIS
(millions)
Year
ended December 31st
2011 2012 2013
Revenues 11,600 11,571 11,909
Gross profit 3,097 2,932 2,442
Operating income 415 361 427
Profit before taxes on income 313 245 279
Net income 276 200 210
===== ===== =====
Consolidated first 6 months of 2014 revenues were NIS 5,803 million (1.6%
decrease compared to parallel period of 2013), making a gross profit of
NIS 1,415 million, an operating loss of NIS 88 million and net loss
of
NIS 125 million (compared to NIS 98 million net income in parallel period of
2013).
The losses in 2014 are due to a slowdown in the local food consumption sector in Israel and losing market share to discount supermarket chains. Subject is taking streamlining and re-organization measures to face that decline (see more below).
Main subsidiaries:
KATIF LTD., vegetable and fruit purchasing (local purchasing and import) arm,
ARBAAT HAMINIM LTD., 100%,
SUPERSOL FINANCE MANAGEMENT LTD., 64%,
GIDRON INDUSTRIES LTD., 100%, manufacturing and suppliers of bakery products for subject's supermarkets.
SUFERSAL REAL ESTAE LTD., 100%, assumed all of subject's real estate activity (see more in CHARATER), owns:
ORVANI INVESTMENTS COMPANY LTD., 100%, holds 37% of LEV HAMIFRAZ LTD.,
HANETZ IMPORTERS EXPORTERS LTD., 100%
SHUFERSAL BIELSOL INVESTMENTS LTD., 50%,
SHUFERSAL FINANCE MANAGEMENT LTD., 64%,
SHUFERSAL FINANCE, LP.
ESTATE HOLDING CO. OF SHUFERSAL LTD., 100%
HYPER KOL LTD., 100%.
DISCOUNT INVESTMENT
CORP. LTD. (DIC), parent company, an investment and holding company, current
market value US$ 646.7 million. Having many holdings (see CHARACTER), main
publicly traded subsidiaries are:
CELLCOM ISRAEL LTD.,
44.85%, one of the 3 largest local cellular operators, 013 NETVISION LTD.,
Internet Service Provider (ISP), national and intl. telephony services,
PROPERTY AND BUILDING CORP. LTD., 76.45%, investment in real estate,
ELRON ELECTRONIC INDUSTRIES LTD., 50.32%, an investment company, in hi-tech companies and start-up ventures.
Among IDB DEVELOPMENT CORP. many other holdings, is 55% in leading insurance and financial Group
CLAL INSURANCE ENT. HOLDINGS LTD.
ISRALOM PROPERTIES LTD., a real estate and holding public company, currently suspended from trade on TASE, also holds:
PALACE INDUSTRIES (P.I.) LTD., 84.75%, a holding company to several industrial companies in the "near-food" sector, including: candles, wet wipes, disposable plastic and paper packaging products for the food and beverage field, disposable aluminum kitchenware products, etc. Publicly on TASE traded, current market value US$ 11.8 million.
Matthew Bronfman also has holdings in (among others):
NORTHERN BIRCH LTD. (Also known as IKEA ISRAEL), importers, marketers and retailers of furniture & household goods, concessionaires of IKEA Sweden.
BANKERS
Bank Leumi Le’Israel Ltd., Tel Aviv Central Branch (No. 800), Tel Aviv - main account.
Also working with:
Israel Discount Bank Ltd., Main Branch (No. 010), Tel Aviv.
Bank Hapoalim Ltd., Central Business Branch (No. 600), Tel Aviv.
Mizrahi Tefahot Bank Ltd., Tel Aviv Main Business Center Branch (No. 046), Tel Aviv.
In January 2009, the Israel Antitrust Authority (IAA) investigators raided subject's offices and investigated its former General Manager, Efi Rosenhaus, with regard to complaints by suppliers, who claimed subject threatens them of not cooperating with rival MEGA Chain in certain “sales” (the latter went on a wide “sales” advertising). IAA has been monitoring subject for several years, mainly regarding binding agreements between subject and suppliers, and in particular since the acquisition of CLUBMARKET supermarket chain (see below), after in 2006 IAA decreed certain limitations upon subject and MEGA BOOL.
In February 2010 an indictment was filed to the Jerusalem District Court against subject, Rosenhaus and another senior officer, regarding violations of IAA's a/m CLUBMARKET related limitations. In December 2013 the Court ruled that subject is to pay a fine of NIS 3 million, and on Rosenhaus 4 1/2 months of imprisonment (out of which 2 1/2 month in communal service) and a fine of NIS 450,000, and further fines on other executives. Subject, Rosenhaus and executives filed an appeal.
In May 2014 IAA officials came to subject's offices requesting documents. Subject was not informed on whom the investigation was made.
There are several lawsuits against subject, none seems to be significant, as well as several motions submitted to the courts for the approval as a class action lawsuits in total volume of circa 1 billion. It should be noted that the procedure for such claims to be approved are usually long and mostly eventually turned down.
Apart from that nothing unfavorable learned (in the legal aspect, on the business aspect –see below).
Subject has been negatively affected from the slowdown in the local food consumption sector. In June 2014 subject's Board approved a streamlining and re-organization plan to increase compatibility, purchase value to client, and a strong ongoing business foundation. Among measures approved: 1. Streamlining including closing of 15 branches and voluntary employee retirement. 2. Price lowering in all branches (all formats) 3. Strengthening of private brand.
Despite our efforts, we were unable to speak with subject's officials, as they were always unavailable. We left messages which so far remain unanswered.
Subject is the largest retail chain in Israel. Its main competitor is MEGA chain. In the overall marketing chains, which includes the non-bar-coded market (groceries, street markets, Arab sector, etc.) Subject holds some 21% of market share (based on market research data 2013, similar to 2012) though the large chains keep losing market share to some 10 “private” chains, who increased their share in recent years to around 25% of total food retail chain market, on account of subject and MEGA (the rest are mini-markets, open markets, smaller shops and others).
Subject is one of the local largest advertisers. In 2013 it ranked 8th local largest advertiser (was 14th in 2012) with advertising volume of NIS 51.5 million, 26% increase from 2012.
Subject was part of the local leading IDB Concern (held via DIC) for many years. IDB became heavily indebted due to the global economic crisis, and faced problems in paying its bond holders (from whom they recruited capital in the previous years, when the market was up). In search for liquidity, IDB shareholders were forced to sell chunks in their holdings and seek debt arrangements with its creditors.
For IDB Concern, special court nominated managers were appointed, which received bids for new controlling owners for IDB. In April 2014 the debt arrangement was finally completed, and the new controlling shareholders fueled over NIS 1 billion, which allowed the IDB concern to survive, where the bond holders will be able to receive money and in addition – they received some 21% in IDB DEVELOPMENT.
Before investing in
subject, BRONFMAN-FISHER Group (ISRALOM) held minority shares in subject's
rival MEGA/BLUE SQUARE, which they sold (23.5%) in January 2007. ISRALOM, a
public holding company, has also been financially troubled in terms of the
doubt in its ability to meet liabilities to the bonds holders.
Businessman Matthew
Bronfman comes from the wealthy Bronfman family of Canada, with investments in
the North America and else in many fields. In Israel, he also controls IKEA
ISRAEL, a leading furniture and household products store.
In 2006 subject acquired CLUBMARKET Chain, then Israel 3rd largest supermarket chain, from its receiver after CLUBMARKET went into receivership, for NIS 764 million (including all assets and liabilities), as well as NIS 19 million for the stock. The deal included the hiring of 2,400 of CLUBMARKET'S employees. The merger of CLUBMARKET into subject was approved in early 2009, after IAA approved the merger under certain limitations, designed to prevent subject from abusing monopoly power.
In 2006 subject launched a new credit card for its clients for non-banking credit and benefits (60% by subject, venture co-owned with PAZ-OIL CO. and BANK LEUMI, 20% each). As of 31.12.2013 there are 466,000 card holders.
Subject has some 1.7 million club members (which comprise of 785 of subject's sales).
In July 2008, subject gained full control of the “Alef” supermarket chain, exercising its option for 50% for NIS 100 million. Alef chain is targeted at the ultra-Orthodox religious sector, with NIS 1 billion sales. Subject unified the Alef chain with its "Zol Po" sub-chain (acquired from CLUBMARKET), and launched the “Yesh” sub chain, for discounted stores.
During 2010 subject launched reorganization and growth plan, which included adding an organic and nature products sector in its stores, increasing its sales area by some 100,000 sq. meters. In July 2011 subject completed the acquisition of the activities and assets of ORGANIC MARKET (controlled by the sister, of Matthew Bronfman), which is operating the "Shufersal Green" departments for NIS 31.1 million.
In March 2013, as part of subject's re-organization, SUFERSAL REAL ESTAE LTD. was established (100% subsidiary), to which subject transferred all its real estate companies and real estate assets (a fair value of NIS 1.6 billion, including 68 branches on overall area of 130 thousand sq. meters - will be leased to subject), and yielding assets.), thus separating subject's consumer activities from the real estate activities.
Shufersal Chain is one
of the 19 supermarket chains which were declared as "large retailers"
by the Antitrust Authority in July 2014 according to the Food Law, which means
that apart from January 2015 will have to abide to certain restrictions in
terms of relations with large suppliers in the local market.
In 2013, there was a decrease in consumption of food products in the marketing markets in terms of quantity, which was halted in money terms due to prices rise.
The marketing chains reported on sharp drop (7.9%) in sales of foodstuffs in the first 2 months of 2014 in terms of quantity. The main reason for the trend is the continuous rise in cost of living in Israel, which cause the decrease in expenditure by consumers. There has been a recovery in the sale of food products in the following months, and food chains sales index marked a 3.3% rise in annual calculation.
According to Nilsen
Market Research survey of the consumer market for the first half of 2014, in money
terms, the market experienced an erosion, and stagnant in terms of quantity,
besides the beverage market, which presented a decrease. The volume of FMCG
bar-coded market totaled NIS 20.6 billion, and was divided into: 79% for food
(-0.5% in money terms, stagnant in quantity), 12% for beverages (-3.3% in
money, -1.9% in quantity), 7% for personal care goods
(-2.3%, stagnant in quantity), and 7% for home care goods (-3%, stagnant in
quantity).
According to Central Bureau of Statistics (CBS), import of food and beverages to Israel in 2013 reached NIS 6,946 million, rising by mere 0.7% (in NIS terms, 7.4% rise in $ terms), continuing the upward growth trend from 2012 (14% rise), 2011 and 2010. In the first 8 months of 2014 import increased by 8% compared to the parallel period in 2013 (by 13% in $ terms).
From the CBS National Accounts for 2013, it turns that expenditure by local households on private consumption grew by 3.7% from 2012, after rising by 3.2% in 2012 and by 3.8% in 2011. Expenditure on food, beverage & tobacco increased by 3.8% (after 3.5% rise in 2012).
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.61.35 |
|
|
1 |
Rs.98.71 |
|
Euro |
1 |
Rs.77.47 |
INFORMATION DETAILS
|
Analysis Done by
: |
DIV |
|
|
|
|
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.