April 28 (Bloomberg) -- Delek Automotive Systems Ltd. dropped the most in almost two months on bets Israeli government steps to lower car prices and boost competition will hurt profitability at the importer of Mazda cars.
Delek Automotive’s stock plunged 4.3 percent, the biggest decline since March 17, to 36.88 shekels at the close in Tel Aviv, bringing the company’s market value to 3.44 billion shekels ($954 million). Trading was more than twice the three-month daily average volume. The shares gained 26 percent last year as the company’s profit more than doubled. The benchmark TA-25 index slid 0.7 percent today.
Prime Minister Benjamin Netanyahu said today the government is taking steps to reduce the cost of living “on land, sea and air,” which will include measures to lower car prices according to a statement from the Ministry of Transport, National Infrastructures and Road Safety. Four importers dominate 55 percent of new car sales in Israel and the majority of vehicles are purchased by four car-leasing companies.
“Lower prices and increased competition could hurt the company’s profitability,” Eran Yunger, an analyst at Migdal Capital Markets, said today by phone.
Delek Automotive, based in Moshav Nir Zvi, Israel, posted net income of 306 million shekels in 2012 compared with 126 million shekels in 2011, according to data compiled by Bloomberg. The company’s first quarter operating income rose 13 percent to 130 million shekels.
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