Rabintex Industries, which specializes in protective equipment for individuals, buildings and cars, included a first- and second-quarter profit warning in the shelf prospectus issued by the company last Thursday and published on the Tel Aviv Stock Exchange's Web site about an hour before the end of trading.
Last Thursday, Rabintex's share price shed 5.3% of its value on NIS 1.9 million in turnover - three times the average daily trade volume of the past three months - bringing the share's total descent to 16% over the past 12 months.
Page 206 of the prospectus mentions an anticipated decline in activity and profitability in the first and second quarters, which will negatively impact the company's bottom line. The drop in profitability is explained as an outcome of the fluctuations in profit margins and sales volume, which change from one tender to the next and are sometimes dependent on the timing of each tender. The terms of each tender differ, including the dates for delivery and when revenue is recorded.
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Rabintex has four design and production centers: ballistic helmets and body armor are made in Beit She'an; protective glass for buildings and vehicles is manufactured in Petah Tikva and Ashdod; and protective fittings for security vehicles in the United States are designed and manufactured by the company's American subsidiary, Burtek, which has contracts with the U.S. Department of Defense and top contractors in the international defense industry.
Rabintex is trading at a market value of NIS 235 million. The company netted NIS 15 million on sales of NIS 519 million in 2007, up from net losses of NIS 3.3 million on NIS 140 million in sales in 2006. Operating profits in 2007 totaled NIS 45 million, compared to NIS 2.2 million in operating losses in 2006.
The increase in sales and profits was due in part to the inclusion of Burtek's results, starting from the second quarter of 2007. Burtek's sales contributed NIS 304 million to Rabintex's revenues last year. The U.S. government's military operations in Iraq and Afghanistan have led to a larger defense budget and increased purchases from Burtek, including the awarding of a three-year, non-binding tender estimated at $94 million, signed in March 2008. This year Burtek also received a job order for 920 ambulances, valued at $27 million, but this order has been delayed by the U.S. Army, due to complaints against the ordering party because of Burtek's winning the tender.
Rabintex is controlled by Inspire Investments, which acquired 60% of the company's shares in January 2007, for $30 million, at that time reflecting a company value of NIS 211 million.
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