Paz Oil Company Ltd. (TASE:PZOL) reported a sharply lower refining margin and net profits for 2011, despite higher revenue, due to the rise in the price of oil and oil products caused by geopolitical tensions in the Middle East and fears of an Israeli strike against Iran.
Full-year revenue rose 19 percent to NIS 12 billion in 2011 from NIS 9.62 billion in 2010, but net profit attributable to majority shareholders fell 88% to NIS 53 million from NIS 460 million.
Paz had a difficult year, due to volatility in the oil market. The volatility was caused by the global economic crisis, the civil war in Libya (a major OPEC oil exporter), and tensions over a possible attack against Iran.
Paz's gross profit rose to NIS 1.15 billion in 2011 from NIS 1.09 billion in 2010, but its operating profit (net of sales, administration, and general expenses) declined slightly to NIS 283 million from NIS 287 million. The plunge in net profit was also due to higher financing expenses, which doubled to NIS 181 million in 2011 from NIS 90 million in 2010.