By Steven Scheer
JERUSALEM – Israel’s Paz Oil said on Wednesday it was spinning off its money-losing refinery business which dragged the company into a loss in the second quarter.
Paz, Israel’s largest distributor of refined oil products, said it slumped to an adjusted 35 million shekels ($11 million) in the quarter, versus a net profit of 8 million a year before. Excluding its refinery business, Paz said it would have earned 51 million shekels.
Revenue doubled to 2.8 billion shekels from 1.4 billion, due to a 30% rise in fuel consumption at its service stations and gains in its retail stores as the company and Israel’s economy recover from the COVID-19 pandemic.
Paz, which supplies a third of Israel’s fuel products, said it was splitting the company into two, with its Ashdod refinery being moved to a separate unit which will also be publicly traded in Tel Aviv.
A wholly owned subsidiary will be created into which shares of the refinery will be transferred, in order to distribute the new stock as a dividend in kind to Paz shareholders.
After the split, shareholders will hold both traded companies, Paz said.
It said the aim of the split is to boost the company’s focus on the “core activities of retail and services, such as accelerated growth in convenience and food retail and entering city centres, entering the world of power supply … and establishing an electric charging network.”
Sales from its retail business, in which it operates a chain of Yellow convenience stores alongside its network of service stations, grew 93% to 1.6 billion shekels.
Paz is seeking to expand its retail business and earlier this month it agreed to buy neighbourhood supermarket chain Freshmarket for 2.1 billion shekels.
Paz is also looking to gain a foothold in real estate and said more than 20 firms had expressed interest in joining it to establish a real estate company.
Its Pazgas energy business, which provides services to about 600,000 households, has received a license to supply electricity starting in September.
($1 = 3.2342 shekels)