Electra Consumer Products 2025: Profit Improved, but Carrefour Still Consumes Capital

Company Overview

Electra Consumer Products is no longer just an air-conditioning company. It is a broad retail and operating group with about 350 branches, roughly 7,000 employees and ILS 7.477 billion of revenue, built on five engines: electrical retail, Carrefour food retail, sports and leisure, consumer electrical products, and investment real estate. A superficial reading sees operating profit up to ILS 433 million and net profit up to ILS 116 million. That is only part of the picture.

What is working now is the combination of three engines. Electrical retail is still growing with positive same-store sales. Sports is holding a strong margin. Carrefour no longer looks like a pure operating hole. The active bottleneck sits somewhere else, in the gap between operating improvement and balance-sheet improvement. Carrefour still needs capital, net debt excluding IFRS 16 went up, and strong operating cash flow does not automatically translate into more financial freedom.

What readers can easily miss at first glance is that the reported profit improvement also includes non-core layers. Operating profit before other income and reorganization rose to ILS 352 million from ILS 311 million in 2024, which is real improvement, but much more modest than the jump to ILS 433 million. That reported figure was also helped by ILS 81 million of other income, mainly a revaluation gain on investment property. At the same time, net profit from continuing operations reached ILS 156 million, while total net profit came in at ILS 116 million because a ILS 40 million loss from discontinued operations, mainly the wind-down of the heating lines, still weighed on the bottom line.

That is also why 2026 looks less like a breakout year and more like a bridge year with a proof test. For the story to improve in a cleaner way, Carrefour needs to show three things at the same time: stable same-store sales, lower debt and finance expense, and proof that margin improvement is not being bought with commercial concessions or more capital. If that happens, Electra starts to look like a retail group with solid profit engines and a balance-sheet issue that is gradually closing. If it does not, the market will move back to the leverage question.

Five findings that matter upfront:

• The headline is stronger than the core. Reported operating profit rose 33.6%, but operating profit before other income rose only 13.2%, to ILS 352 million.
• Carrefour improved, but not through clean demand growth. Food sales fell 1.5% and same-store sales fell 1.4%, even as segment profit rose 23.8%.
• The move to net profit in food is not fully recurring yet. Global Retail moved to roughly ILS 15.5 million of net profit during the period, but also benefited from a first-time deferred-tax asset recognition.
• The balance sheet only looks calmer through part of the lens. Net financial debt including IFRS 16 fell to ILS 3.408 billion, but net financial debt excluding IFRS 16 rose to ILS 929 million from ILS 832 million.
• Even the Carrefour impairment test does not tell a fully clean story. The value-in-use work assumes a decline in Global Retail gross margin in 2026, partly because of the "Israel's Cheap Basket" tender, and only then a recovery path.

The group’s economic map looks like this:

Key strengths

• Broad retail platform with scale, logistics and multi-brand reach, 4 out of 5.
• Proven execution in electrical retail and sports, 4 out of 5.
• Strong position in HVAC, service and international brands, 3.5 out of 5.

Key risks

• Carrefour still needs more equity support and lower leverage, 5 out of 5.
• Part of the reported improvement comes from accounting layers rather than pure operations, 4 out of 5.
• The group is exposed to interest rates, CPI-linked rent, leases and aggressive competition across several markets at once, 4 out of 5.

Events And Triggers

The year when the headline improved faster than the core

2025 was a good year, but it has to be broken into layers. Revenue rose 3.1% to ILS 7.477 billion. Gross profit rose to ILS 2.201 billion and gross margin improved to 29.4% from 28.6%. Up to that point, the operating story is clearly better. Operating profit before other income and reorganization also rose to ILS 352 million from ILS 311 million, so this was not just accounting polish.

But anyone looking at ILS 433 million of operating profit and 34% growth needs to remember that ILS 81 million of other income was recorded this year, versus only ILS 14 million in 2024. That included a ILS 64 million revaluation gain on investment property and investment property under construction. The implication is straightforward: operations improved, but not by as much as the headline operating figure suggests.

The same separation matters at net profit level. Profit from continuing operations came in at ILS 156 million versus ILS 56 million in 2024. But the report also included a ILS 40 million loss from discontinued operations, mainly the cutback of the heat-pump lines, so total net profit was ILS 116 million. In other words, 2025 shows both a stronger group and still-expensive remnants of cleaning up an older industrial portfolio.

Carrefour moved from conversion to proof

Something important happened at Carrefour. The conversion program was completed, and by the report publication date 151 stores were operating under the brand. At segment level, EBITDA excluding IFRS 16 jumped to ILS 142 million from ILS 98 million in 2024, and segment profit rose to ILS 161 million from ILS 130 million. At Global Retail level, after the company’s adjustments, operating profit reached about ILS 152 million and net profit reached about ILS 15.5 million, versus a loss of about ILS 46.9 million a year earlier.

That does not mean the story is already clean. Food sales fell, both on a full-year basis and in the fourth quarter. Management itself ties that to the reopening of overseas travel, more trips abroad, weaker institutional sales through the stores, and sold branches. This is no longer a conversion year. It is the year when the market starts asking whether the format can grow on its own feet.

Funding, equity and land

During the year the company paid ILS 80 million of dividends, bought back shares for ILS 3.1 million, issued ILS 150 million of commercial paper and reaffirmed its ilAA- rating with a stable outlook. After the balance-sheet date, another ILS 40 million dividend was approved. At the same time, Global Retail approved a ILS 100 million equity raise, of which about ILS 61 million had already been received by the report approval date.

There is also a real-estate trigger, but not yet a cash trigger. The company canceled an old deal with Reality, returned an advance and reimbursement totaling about ILS 31 million, and bought Reality’s rights in adjacent land in Rishon LeZion for total consideration of about ILS 66.8 million. After the balance-sheet date, another agreement was signed to advance a new zoning plan for the land. That can become a value source, but at this stage it is still a planning-and-enhancement move, not accessible cash.

Efficiency, Profitability And Competition

Electrical retail still looks like a relatively clean growth engine

Electrical retail remains one of the healthier parts of the group. Sales rose 8.7% to ILS 2.773 billion. Same-store sales rose 2.1%. Online sales rose 8.4%. Direct-import sales of Electra and Samsung brands rose by about 32%. Even in the fourth quarter the segment held momentum, with sales up 8.3% and segment profit up 66.1% to ILS 37 million.

What matters here is the quality of the improvement. The segment did not grow only on volume. The presentation shows gross profit up about 12.1%, and annual segment profit rose to ILS 122 million. In other words, the improvement came from a combination of pricing, mix, direct import and online advantages.

There is still a less comfortable point. Average trade receivables in the segment rose to ILS 283 million from ILS 198 million, much faster than the sales growth rate. That does not cancel the improvement, but it does suggest that part of the volume was supported by more credit. In growth-quality terms, it is a reminder that even a strong engine still needs working capital.

Carrefour improved operationally, but demand still does not look clean

At Carrefour there is a clear gap between sales and profitability. Sales fell to ILS 3.286 billion, same-store sales fell 1.4%, and the fourth quarter looked weaker still, with sales down 6.0% and same-store sales down 9.3%. Anyone looking only at the top line would struggle to explain why the segment’s profit jumped.

The answer comes from several layers combined. The company points to better gross profit, operating-efficiency gains, store sales, higher worker productivity, tighter inventory management, lower shrink and the absorption of foreign workers. The presentation adds around 20% online-sales growth, around 45% growth in Le Marche delicatessen sales, around 1,700 Carrefour products and about 53 stores active on Wolt. This is exactly the sort of post-conversion improvement the market wanted to see: profitability improving through store economics and execution, not just through rebranding.

But this is where it is worth stopping. Management presents the "Israel's Cheap Basket" tender as an expected annual revenue addition of about ILS 300 million, alongside ILS 50 million of marketing support. On the other hand, both the Global Retail impairment work and the goodwill note explicitly assume that gross margin will decline in 2026, partly because of that same tender. This matters. Revenue can go up, but part of that volume may come at a lower margin. So 2026 will not be only a growth test. It will be a growth-quality test.

Sports and leisure is smaller, but higher quality

The sports and leisure segment continues to look good. Sales rose 6.2% to ILS 542 million, same-store sales rose 2.0%, and segment profit rose to ILS 53 million. Segment margin stands at 9.8%, well above electrical retail and food.

Its contribution to the thesis is not just numerical. This is an engine that combines store openings, positive same-store growth and better profitability at Saar. In the presentation the company already frames it as a growth platform for international brands, with a 2027 target of ILS 75 million to ILS 85 million of EBITDA excluding IFRS 16. That is still management guidance, not fact, but the direction matters because it means the whole burden does not have to stay on Carrefour.

Consumer electrical products is becoming a cleaner HVAC platform

The consumer electrical-products segment grew only 1.7% to ILS 1.029 billion, but the modest headline hides two different stories. On one side, the climate-systems business improved, including about 15% growth in air-conditioning sales and about 10% growth in water-based cooling systems, alongside the new Samsung air-conditioning distribution agreement in Israel. On the other side, the brands-trading activity was hurt in the second quarter by the June 2025 war disruption.

That split matters. Electra is building a climate and service platform across Electra, Daikin, Midea and Samsung, and it also reported order backlog up to ILS 214 million from ILS 201 million. At the same time, it is still paying for the shutdown of the heating-systems activity, which was moved into discontinued operations. That is exactly the tension between an older industrial legacy and a more modern retail-and-service group.

Cash Flow, Debt And Capital Structure

Strong operating cash flow, but the all-in cash picture is much less comfortable

The framing matters here. This section looks at all-in cash flexibility, meaning how much cash is left after actual cash uses, not just at the cash-generating power of the underlying business.

At the operating level, cash flow is still strong: ILS 531 million versus ILS 559 million in 2024. That is a respectable level, especially against ILS 116 million of total net profit and ILS 156 million of net profit from continuing operations. Even with some decline versus 2024, the group is still generating cash.

But that cash is absorbed quickly. During the year the group invested ILS 225 million in fixed assets, another ILS 9 million in intangible assets, ILS 41 million in investment property under construction and another ILS 7 million in capitalized real-estate costs. At the same time it paid ILS 227 million of lease principal, ILS 80 million of dividends, ILS 82 million of bond repayments and ILS 347 million of long-term loan repayments. This is no longer a simple "strong cash flow" story. It is a cash picture under pressure from many real uses.

The company ended the year with cash up by only ILS 22 million because it also released ILS 250 million of short-term deposits and ILS 15 million of marketable securities, added ILS 208 million of net short-term credit, and realized ILS 43 million from selling branches and fixed assets. This is the core point. The business generates cash, but common-shareholder flexibility still depends on balance-sheet sources, not only on operations.

Debt looks calmer only if lease accounting does the work

Net financial debt including lease liabilities fell to ILS 3.408 billion from ILS 3.475 billion. Stop there and the group looks like it made nice progress. Strip out IFRS 16, and the picture flips: net financial debt rose to ILS 929 million from ILS 832 million.

The main explanation is that a significant part of the "improvement" in total debt came from shorter lease terms at some Carrefour branches. That is an important accounting event, but it is not the same as economic deleveraging. The company itself explains that total net debt fell mainly because of the lease-term changes, while net debt excluding IFRS 16 rose because of investment in fixed assets, investment real estate and investment property under construction, along with dividend payments.

The lease layer itself is large. Lease liabilities stood at ILS 2.479 billion, versus ILS 2.643 billion a year earlier. That means any debt analysis that ignores leases misses a major cash burden, but any debt analysis that relies only on total reported debt without separating out the lease-term effect also misses the real direction of economic leverage.

Covenants, ratings and equity support: no immediate crisis, but no room for complacency

At the parent-company level, the bond series remains rated ilAA- with a stable outlook, and the company remained in compliance with its covenants. The key thresholds in the deed, tangible solo equity of at least ILS 350 million and net financial debt to net balance-sheet total of no more than 67%, were not breached.

There is also no reported covenant breach at Global Retail, and the company updated the banking covenants during the year. That matters because it means the problem is not an immediate credit event. The problem is how much equity and debt Global Retail will still need in order to move from the conversion phase to a phase where it funds more of itself.

The presentation tries to frame that as an orderly plan: improved capital structure, around ILS 20 million of lower interest expense, more outside investors and, potentially later, a public listing route for Global Retail. All of that sounds constructive, but as of the report date it remains part of a plan, not yet a delivered outcome.

Working capital: the real strain is concentrated in food

The group had negative working capital of ILS 1.508 billion and negative operating working capital of ILS 310 million. The big number can look alarming, but the company itself highlights that excluding the food-retail segment, the group would have positive operating working capital of ILS 334 million. That is an important distinction, because it sharpens the point that this is not an "Electra everywhere" problem. It is primarily a Carrefour capital-cycle problem.

That is exactly why equity support, branch sales, an outside investor and lower interest expense matter more than yet another decent quarter in electrical retail. The other chains are buying the group time. Carrefour will decide whether that time is being used well.

Guidance And What Comes Next

2026 is a bridge year, not a victory lap

Management is targeting 2027 revenue of ILS 8.8 billion to ILS 9.2 billion and EBITDA excluding IFRS 16 of ILS 550 million to ILS 600 million. By segment, it presents food EBITDA excluding IFRS 16 of ILS 230 million to ILS 250 million, electrical retail of ILS 145 million to ILS 155 million, sports of ILS 75 million to ILS 85 million, and consumer electrical products of ILS 100 million to ILS 110 million.

Those are ambitious targets, but 2026 sits between a model that has been partly proven and a cleaner model that still has not been reached. That is why it makes sense to frame 2026 as a bridge year with a proof test, not as a final target year and not as a clean breakout by default.

First test: can food add volume without eroding quality

Management expects the "Israel's Cheap Basket" tender to add around ILS 300 million of annual revenue, plus ILS 50 million of marketing support. At first glance that looks like a positive trigger. But both the presentation and the impairment work point to the fuller picture: the cheap basket can drive traffic and volume, while also putting pressure on gross margin.

That means the next report will not be judged only on whether Carrefour sold more. The market will ask whether those sales remained profitable, whether operating expenses kept improving, and whether the working-capital and financing impact stayed reasonable. This is already a conversation about quality of sales, not only quantity of sales.

Second test: does the operating improvement reach the balance sheet

The second test is capital. After the report, a ILS 100 million equity raise was approved at Global Retail, and ILS 61 million had already been received. In addition, the company continues to explore bringing in an outside investor. If that process is completed and comes with lower finance expense and lower debt, the market will have its first proof that the 2025 improvement does not stop at EBITDA.

If, on the other hand, more quarters of better operating performance arrive without a clear reduction in leverage, the story will remain stuck. Carrefour will not be judged only on stores and shelves. It will be judged on whether it can stop consuming capital.

Third test: the non-food engines still need to carry the group

Electrical retail and sports have an important strategic role over the next two years. They need to keep growing without erosion, because they are the engines that allow the group to breathe while Carrefour is being tested. In consumer electrical products, the agreements with Midea, Daikin and Samsung, together with the growth in backlog, can add another profit layer, especially if the Samsung relationship expands beyond air conditioning into smart-home systems and additional products.

But there are limits here as well. Growth in electrical retail already comes with a faster build in receivables. Growth in HVAC is tied to construction activity, interest rates, weather and regulation. In other words, the non-food engines are strong, but they are not immune to the cycle.

Value is being created, but it is not fully accessible yet

Real estate adds another layer to the story. On the accounting level it contributed ILS 64 million of revaluation gains this year, and its segment profit jumped to ILS 71 million. In the presentation management already speaks about real-estate assets worth around ILS 550 million and about value-enhancement steps for the Rishon LeZion land.

The problem is that this is still value sitting somewhere between land and cash. As long as there is no monetization, attractive financing or planning progress that can actually unlock capital, it does not solve the debt pressure. Anyone who wants to assign a meaningful premium to the real-estate piece has to ask not only what it is worth, but when and how it can serve the group.

Risks

Carrefour is still exposed to a difficult mix of competition, funding and expectations

This remains the core risk. The improvement in food is real, but the market is highly competitive, pricing flexibility is limited, and the company is still relying on a combination of store sales, equity injections, foreign workers, better trade terms and a partial move to a franchise model. If one of those elements stumbles, the thesis weakens quickly.

In addition, the Carrefour franchise agreement no longer creates only opportunity. It also creates a test. The company benefits from a strong private brand, but it also carries obligations, adaptation costs and pressure to show that the format works at the profitability level, not only at the branding level.

Reported net profit still includes non-recurring layers

Several layers in 2025 make the profit line harder to read cleanly. On one side, real-estate revaluation contributed to other income. On the other side, the discontinued heating activity produced a ILS 40 million loss. In addition, at Global Retail level a deferred-tax benefit was recognized for the first time because of expected future taxable income. All of this is valid accounting, but it also underlines that this year’s net profit is not a simple run-rate for 2026.

Interest rates, CPI and FX still matter

The group is exposed to prime-linked short-term and long-term borrowing. According to the note, a 1% increase in interest rates would raise net finance expense by about ILS 7 million. At the same time, a 1% increase in CPI would raise annual rent expense by about ILS 4 million.

On foreign exchange, the company buys a meaningful portion of its products and inputs in dollars and euros while selling in shekels. It does hedge and it can reprice, but that is not immunity. In periods of unusual volatility, part of the pressure can still flow through to gross margin or to the speed of passing costs on to customers.

Legal exposure is not existential, but it is not noise

The group reports total legal and contingent exposure of ILS 620 million, against provisions of ILS 34 million. That is not a figure that can simply be ignored. It includes both the Beitan-related disputes and a meaningful class action at Global Retail.

In the Beitan matter, the interim arbitration decision rejected the main remedies that would have forced the company to exercise an option or list Global Retail, but it left a narrower dilution-and-holdings adjustment question to an expert. The company says the impact on the consolidated statements is not material beyond the accounting already recorded. Even so, it is another reminder that Carrefour still comes with legal baggage from the past.

Conclusions

Electra Consumer Products looks like a better group today than it did a year ago. Electrical retail and sports look strong, Carrefour no longer looks like a purely operational problem, and the company continues to show strong execution. The central bottleneck has moved away from store conversions and sales and toward capital structure: can Carrefour’s operating improvement turn into lower debt, easier funding and a cleaner picture for shareholders.

Current thesis: Electra has built solid profit engines, but 2026 will be judged mainly on whether Carrefour can stop consuming capital faster than it creates value.

What changed versus the previous read is that Carrefour is no longer judged only on completing the conversion and surviving the format shift. It is now judged on the quality of the improvement. At the same time, the non-food segments are giving the group a better profit base than it had in 2023 and 2024.

Counter-thesis: the market may already be too harsh on Carrefour. The conversions are done, food EBITDA has jumped, the company has raised equity, is selling stores, and still owns quality non-food engines. If so, lower finance expense and further gradual margin improvement could be enough to bring debt down over time.

What could change the market’s interpretation in the short to medium term is mainly a combination of three datapoints: the pace of decline in net debt excluding IFRS 16, the real margin impact of the cheap-basket tender, and whether additional equity strengthening is completed at Global Retail. That is where the proof will be sought.

Why does this matter? Because Electra has already shown that it knows how to operate retail in several categories. The next step is proving that it can translate that into a balance sheet that creates accessible value for common shareholders, not just an improved profit-and-loss statement.

Over the next 2 to 4 quarters, the thesis strengthens if Carrefour shows same-store stability, lower leverage and lower finance expense without hurting margin. It weakens if food volume comes at the expense of profitability, if equity raises become routine, or if the stronger segments also begin to consume more credit and working capital.