Location-based services provider Ituran Location and Control Ltd. (ITRN) Tuesday reported a decrease in net profit for the third quarter, hurt mainly by lower revenues and a financial expense with regard to depreciation of the US dollar against the Israeli shekel. However, on a per share basis, earnings beat Street view by three cents. Separately, the company said the board has approved an increase in dividend policy.
For the third quarter, the Azour, Israel-based company's net earnings were US$4.63 million or US$0.22 per share compared to US$5.64 million or US$0.27 per share in the prior-year period.
On an average, six analysts polled by Thomson Reuters expected Ituran to earn US$0.19 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the period declined 9% to US$32.03 million from US$35.22 million in the third quarter of fiscal 2008. Analysts expected the company to generate revenues of US$29.07 million for the quarter.
Ituran's revenues from location-based services, constituting 75% of the total revenues, were US$23.99 million versus US$23.58 million, reflecting the rise in subscriber base which stood at 495 thousand at the previous year quarter.
The company's net subscribers as of September 30, 2009 increased by 16 thousand to 549 thousand.
Revenues from wireless communications products, constituting 25% of the total revenues, slumped to US$8.05 million from US$11.64 million a year earlier, reflecting lower product sales in Israel, full switch to leasing rather selling equipment in Brazil, and relative strength of US Dollar versus Israel Shekel, Brazilian Real and Argentinean Peso in the current quarter compared with that of a year ago.
During the three-month period, research and development costs incurred by the company fell to US$95 thousand from US$107 thousand, selling and marketing expenses were US$1.94 million compared with US$2.42 million in the 2008-year period. Operating income for the period slipped to US$6.46 million from US$7.39 million in the last year.
Ituran had a net financing expense of US$666 thousand as compared with an income of US$1.23 million in the previous year, due to the depreciation of the US dollar against the Israeli shekel during the quarter compared with last year.
For the nine-month period, net income increased to US$12.66 million or US$0.60 per share from US$9.00 million or US$0.42 per share in the same period last year. Year-to-date revenues were US$87.71 million versus US$103.21 million in the comparable period prior year.
Co-chief executive officer Eyal Sheratzky said, "We won a tender for stolen vehicle recovery services, for at least 50,000 vehicles installed over two years with a leading Brazilian Insurance company, Sul America, and recently signed the agreement."
In a separate press release, Ituran said the board has approved an increase in dividend policy, providing for an annual dividend distribution in an amount not below 50% of its net income. Historically, the company's annual dividend policy has been to issue about 25% of annual net income, calculated based on the financial statements for the period ending on December 31 of the fiscal year with respect to which the relevant dividend is paid. The payment of dividends may be subject to Israeli withholding taxes, the company stated.
In Monday's regular trading session, ITRN closed trading at US$12.60 per share on the Nasdaq. In the past 52-week period, the shares have been trading in a range of US$5.76 to US$13.13.
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