Social protest rally in Jerusalem 311.
(photo credit: Marc Israel Sellem/The Jerusalem Post)
The capital gains tax hike to 25 percent, as recommended by the Trajtenberg
Committee, resulted in Osem Investments Ltd. reporting a one-time NIS 19
million tax expense, which lowered its fourth quarter net profit,
falling 9% to NIS 67.4 million from NIS 74.1 million for the
corresponding quarter of 2010.
Nevertheless, the food company's
full-year net profit attributable to majority shareholders rose 7.7% to
NIS 341 million (NIS 3.08 per share) in 2011 from NIS 316.3 million in
2010. Revenue rose 4.2% to NIS 3.96 billion in 2011 from NIS 3.81
billion in 2010.
Osem mentions the social protest more than once
in its financial report. It says that, due to the protest it decided to
"listen to the public mood" and absorb higher costs for raw materials
and inputs (energy, water, and arnona (local property tax)), and freeze
"Since the outbreak of the social protest,
Osem has discussed how to respond to the public mood, and initiated
measures to help lower prices for basic food items in the Israeli
consumer basket," it states. In the first step in July, Osem cancelled
planned price hikes to keep pace of increased prices of inputs. In the
second step, Osem cut prices by up to 10% for basic food items used by
most households and related to the broadest common denominator of all
"These measures are part of Osem's social program,
which includes changing the salary structure of the company, which has
4,900 employees, under which executive salaries will be frozen in 2012
and the resulting surplus will be used to benefit company employees who
earn less than the average national salary."
Commenting on the
Kedmi report on food prices, Osem said, "The Food Committee has only
published its interim report. At this preliminary stage, it is not
possible to assess the changes that will result from the Food
Osem's financial report clearly
shows that the price cuts and freezes announced did not affect the
company's financial results - on the contrary. Gross profit rose 0.5% to
NIS 1.65 billion in 2011, and the gross profit margin rose to 43.1% in
2011 from 41.7% in 2010. Operating profit rose 3.5% to NIS 502 million,
the 14th continuous year of growth. Operating profit has risen nine-fold
over these 14 years.
Osem will distribute a dividend of NIS 300
million, 88% of its profit for 2011, after distributing 47% of its
profit in 2010 and 34% in 2009.
Osem CEO Gazi Kaplan will leave
the company on April 2, for health reasons. He earned NIS 3.6 million in
2011, and Osem chairman Dan Propper earned NIS 3 million. The company's
six highest-paid executives earned nearly NIS 15 million in 2011.
Kaplan's successor, Itzik Tzaig, will earn NIS 124,000, plus bonuses,
benefits, and phantom options to be decided by the board of directors.
SA owns 58.8% of Osem. Osem's share price rose 0.3% in early trading
Sunday to NIS 56.24, giving a market cap of NIS 6.2 billion.