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Delek Group Reports Higher Q1 Net Income

TEL AVIV, Israel -- Delek Group Ltd. reported improvement in profitability across the majority of its subsidiaries in its first quarter, with net income of NIS 205 million ($53 million U.S.), some 31 percent higher over first quarter of 2009, thanks especially to its automotive, financial and insurance sectors.

Delek US, operator of MAPCO Express and other convenience stores, saw first quarter revenues of NIS 3.3 billion ($853.1 million) compared with NIS 1.5 billion ($387.7 million) in the first quarter of 2009, when Delek's Tyler, Texas refinery was closed for repairs and upgrades. Still, the U.S. operations saw a net loss in the first quarter of NIS 57 million ($14.7 million), compared with a loss of NIS 2 million ($570,000) the year prior.

The U.S. results were adversely impacted by a combination of severe winter weather in several of core retail markets during January and February, and weak Gulf Coast refining economics, which persisted for most of the quarter, the company said in a statement.

Contribution margin from the refining and marketing sectors was NIS 39 million ($10.1 million) in the first quarter of 2010, compared to a profit of NIS 93 million ($24 million) for the quarter in 2009. Within the retail segment, same-store merchandise sales improved for the third consecutive quarter, due in part to increased contributions from reimaged store locations open more than one year, the company said. A slight decline in the same-store fuel gallons sold was offset by an increase in the first quarter retail fuel margin, when compared to the year-ago period.

Looking ahead, Delek US management believes there is increased demand for refined products sold in the refining, retail and marketing segments, the company said. This uplift in demand is primarily attributable to a combination of favorable seasonal trends and improving economic conditions in regional markets.

Delek Group revenues for the first quarter of 2010 were NIS 11.4 billion ($2.9 billion), a 25-percent increase compared with NIS 9.1 billion ($2.35 billion) in the first quarter of 2009. The increase in revenues was primarily due to revenues from the U.S. refinery.

Additional revenue growth was attributed to an increase in the price of oil compared to last year. In addition, the company saw improved revenues in its automotive, insurance and finance operations.

"The strong results that we reported today represent another solid quarter of improvements in our core group activities," said CEO Asaf Bartfeld. "We intend to reinvest the substantial fruits of our efforts over the past years back into the company and expand our core activities.

"The majority of our subsidiaries all had solid quarters, but in particular we are very pleased with the performance of the Phoenix Insurance company and our automotive subsidiary. We have continued to enhance our net asset value and strengthen our balance sheet across the group and all its subsidiaries, and this remains a constant core element of our strategy."

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