NEW YORK (Oct. 5)
More than 60 years after its creation by such early American Zionist leaders as Louis Brandeis and Felix Warburg, PEC Israel Economic Corpration continues to benefit both Israel’s economy and investors in the holding company.
PEC recently announced substantial increases in earnings for the first half and second quarter of 1987. For the first six months of this year, earnings were $4,721,949, or 64 cents per share– a gain of 113 percent from the same period last year.
(In 1986, earnings for the first six months were $2,177,050, or 30 cents per share; net income for all of that year was 60 cents per share.)
For the quarter ending June 30, 1987, PEC’s net income was $2,713,183, or 37 cents per share, up from $1,639,759, or 23 cents per share in the same period during 1986.
AN OUTSTANDING ACHIEVEMENT
An American company incorporated in Maine in 1926 (as Palestine Economic Corporation), PEC was founded as a means of fostering economic development in the Yishuv (Jewish community in Palestine). “The philosophy of the founders was that support of Israel should not only be donations, but also making sound economic investments,” PEC president Joseph Ciechanover told the Jewish Telegraphic Agency.
“Current results justify our faith in the basic soundness of Israel’s economy. It was an outstanding achievement for Israel to reduce its inflation rate from 500 percent in 1985 to less than 16 percent so far this year. PEC’s continued rise in profits reflects improvement in the net income of most of the company’s affiliates and a substantial increase in net gain on sales of investments.
Traded on the American Stock Exchange under the symbol “IEC,” PEC organizes, finances and participates in the management of widely diversified businesses located in Israel or affiliated with Israeli enterprise.
The two largest shareholders are IDB Development Corporation Ltd. (a member of the IDB Bankholding Group in Israel), which owns 80 percent of the shares, and companies controlled by Edmund de Rothschild, which hold 12 percent. The other eight percent is owned by American individuals and institutions.
DIVERSIFIED HOLDINGS AND SUBSIDIARIES
Among PEC’s current equity holdings ae affiliated companies and wholly-owned subsidiaries in such fields as high technology and scientific research, heavy and light industry, shipping and marketing, finance and banking, and real estate and development.
Some of PEC’s affiliations, such as Property and Building Corporation, one of the largest real estate holding companies in Israel, and General Engineers, exclusive distributor and agent in Israel for General Electric Company, predate the State of Israel.
Other PEC affiliates in Israel include Israel Can Company, Klil Industries (aluminum extrusions), Mul-T-Lock (security equipment), Tambour Paints, Elron Electronic Industries, Scitex Corporation (computer imaging), El-Yam Ships, Ofran Drive Yourself (rental cars) and Super-Sol supermarkets.
The only PEC investment outside of Israel is Israel Discount Bank of New York, of which PEC has 18 percent of the shares. The bank, PEC’s main affiliate and largest investment, is the 15th largest commercial bank in New York State, in terms of deposits. Assets on June 30, 1987 were $3.8 billion. PEC president Ciechanover is also president of the bank.
“PEC only invests in companies in which it can participate in the management,” Ciechanover said. “We have initiated hundreds of companies, helped them get started, brought them to maturity, and then, at the right time, sold our holdings. Our holdings are constantly turning over, as we sell them and acquire new ones. We make sound economic investments, and are so diversified we can show a reasonable profit.”
Through its sister company in Israel, Discount Investment Corporation, PEC maintains financial and administrative expertise to supervise the operation of its affiliated companies there. Experience with its diversified affiliates also helps PEC to evaluate new and promising business opportunities in Israel.
The results today reflect both the foresight of Brandeis and Wardburg and Ciechanover’s current observation; A sound investment in Israel can profit both the country’s economy and the investor.