Inrom Building: How Much of Nirlat's Profit Is True Recovery, and How Much Is Still Compensation
Nirlat has already restored sales, gross profit, and a large part of its production footprint, but at the operating-profit line the paints segment in 2025 still leans more on property-tax compensation than on a normal margin structure. The direct compensation still ahead is tied mainly to rebuilding the new plant, not to proving that profitability has normalized.
The main article already established that Inrom's recovery is broad. Nirlat remained the open variable that still determines whether 2025 is the start of normalization or merely a successful bridge year. This follow-up narrows the question further: not whether Nirlat is selling again, but how much of the profit already showing up in 2025 comes from a real business recovery, and how much still rests on property-tax compensation and a temporary production setup.
The company does not disclose a separate net-profit line for Nirlat. So the cleanest way to read the story is through the paints segment: sales, gross profit, operating profit, and other income. From that angle the conclusion is two-sided. There is a real business recovery, because sales and gross profit rebounded sharply. But at the operating line the segment still does not stand on its own. In 2025 the other-income layer is still larger than the segment's reported operating profit.
Where The Business Recovery Is Real
Nirlat's 2025 recovery is not just a story of other income. Paints-segment sales rose to NIS 400.3 million from NIS 295.7 million in 2024, up 35.4%. Gross profit almost doubled to NIS 92.8 million from NIS 47.4 million, and the gross margin improved to 23.2% from 16.0%. That is the most important starting point, because property-tax compensation does not sit in gross profit. It sits in other income. So the gross-profit improvement is the cleanest proof that Nirlat really did restore production, availability, and commercial traction.
The filings also provide three signs that this is a business rebuild rather than just an accounting cushion. First, the company explicitly says Nirlat returned to the market, increased production capacity, and expanded its product range, even though it has not yet returned to the profitability levels it had before the war. Second, production is less dependent on emergency third-party bridges than it was earlier in the process: the arrangement with the Greek supplier ended at the end of 2025, and those water-based paint products are now produced at the temporary Beersheba site. Third, the company says that almost all of the alternative production capacity for core building-paint products was utilized during the year. That matters, because it suggests the quick volume recovery phase is largely behind it.
That means the improvement in sales and gross profit is no longer best described as survival mode. It looks like a business that has regained shelf presence, rebuilt supply, and improved execution. Anyone reading 2025 as compensation only is missing the core of the picture. There is real operating recovery here.
Where Profit Still Rests On Compensation
This is the heart of the issue. The paints segment reported NIS 64.7 million of operating profit in 2025, versus NIS 59.2 million in 2024. On the surface that looks like an easy answer: sales came back, profit came back, story closed. But in the same year the segment recorded NIS 80.4 million of net other income. Strip that layer out, and the paints segment is still left with an operating loss of NIS 15.7 million in 2025. In 2024 that pre-other-income operating loss was NIS 45.8 million.
This is subtle, but it is the decisive distinction. 2025 does deliver real business improvement of roughly NIS 30.1 million at the operating-result level before other income. But it still does not deliver normalization. The segment moved from a deep operating loss to a much smaller one, while property-tax compensation is still what turns the reported line positive and respectable.
| Metric | 2024 | 2025 | What it means |
|---|---|---|---|
| Paints-segment sales | NIS 295.7m | NIS 400.3m | Volume recovered sharply |
| Gross profit | NIS 47.4m | NIS 92.8m | Real business recovery, not just compensation |
| Other income in segment | NIS 105.0m | NIS 80.4m | Accounting support fell, but remains very large |
| Reported operating profit | NIS 59.2m | NIS 64.7m | The headline looks cleaner than the economics underneath |
| Operating profit before other income | NIS 45.8m loss | NIS 15.7m loss | Real improvement, but still not normal |
At the group level, the composition of other income explains why. In 2025 the company recorded NIS 70.8 million of indirect compensation and another NIS 9.7 million of net direct compensation. In other words, almost the entire other-income layer recorded in 2025 still relates to Nirlat and the war, not to a margin structure that has already normalized.
Even the fourth quarter, which was the strongest quarter of the year, still does not give a clean read. Paints-segment sales rose to NIS 108.2 million from NIS 91.9 million in the comparable quarter, and operating profit rose to NIS 19.0 million from NIS 12.5 million. But the company itself explains that the improvement in operating profit also reflected changes in property-tax compensation. So even the quarter that closes the year still blends business improvement with compensation support.
Why The Remaining Compensation Looks More Like Rebuild Funding Than Earnings
To read 2026 correctly, the distinction between indirect and direct compensation matters. Indirect compensation supports current results because it addresses damage to the business. Direct compensation is mostly tied to damaged inventory, equipment, buildings, and the reconstruction of the plant. That is a fundamental difference, because direct compensation can finance the road back without proving that the operating margin is already normal again.
In August 2025 Nirlat signed an agreement with the property-tax authority under which it will receive NIS 215.6 million plus VAT, on top of the NIS 100 million advance paid in October 2023. On August 18, 2025, Nirlat received another NIS 57.8 million advance, and the balance is to be paid according to construction progress and against invoices. The March 2026 presentation states the point even more clearly: another NIS 158 million is to be paid according to the pace of building the new plant.
The following figures should not be added together. Each sits in a different layer of the same story:
| Layer | Amount | Meaning |
|---|---|---|
| Indirect compensation recognized in 2025 group profit | NIS 70.8m | Supported Nirlat's current operating results |
| Net direct compensation recognized in 2025 group profit | NIS 9.7m | Limited accounting contribution to the year's profit |
| Cumulative advances received by December 31, 2025 | NIS 318m | Funded damage, disruption, and reconstruction |
| Net compensation receivable on the balance sheet at year-end | NIS 98m | The property-tax file is still not closed |
| Additional direct compensation cited in the presentation | NIS 158m | To flow in line with progress on the new plant |
The cash flow statement also makes clear that not every shekel of compensation is profit. In 2025 the company recorded NIS 56.5 million of property-tax advances attributed to direct damage to Nirlat's fixed assets within investing cash flow. That is a clear sign that part of the money is first and foremost rebuilding productive assets. So the direct compensation still ahead is very important for liquidity and for financing the rebuild, but it does not substitute for a margin test.
That is the right way to read the profit line as well. When direct compensation is linked to reconstruction progress, part of the money functions as financing bridge capital on the way to the new plant. It helps a great deal, but it does not mean the temporary Beersheba setup already generates the same economics the rebuilt plant is supposed to deliver.
What Still Has To Happen Before This Looks Like Normalization
The company itself says Nirlat has still not returned to its pre-war profitability levels. That is not a routine cautionary note. It is the core test. The first thing that now has to happen is for the paints segment to move into positive operating profit even without other income. As long as that line stays negative, it is hard to argue that Nirlat is already back to normal economics.
The second thing is real progress on the new plant. The company describes ongoing negotiations with the main equipment supplier and estimates that the construction of the new plant and facilities will take place over the next three years. That is a long runway. So 2026 looks less like a normalization year and more like a transition year between restored volume and a margin structure that is still being rebuilt.
The third thing is an efficiency test at the temporary site. Because the company already says the alternative capacities were almost fully utilized in 2025, the next step will not come from selling more units alone. It will have to come from better production economics. If that improvement does not show up, the market may conclude that Nirlat can recover volume before it can recover margin.
Conclusion
Nirlat in 2025 is not an accounting mirage. Sales, gross profit, the reduced reliance on partial external production, and the broader return to self-operated production are all signs of real business recovery. But this is still not normal economics. The paints segment's NIS 80.4 million of other income remains larger than its reported operating profit of NIS 64.7 million, and the direct compensation still ahead is in practice tied to progress on the new plant.
So the answer to the title is fairly sharp: 2025 already contains genuine business recovery, but Nirlat's profit still rests more on compensation and a bridge operating year than on a normalized margin structure. For the story to become clean, the next reports will have to show both at once: indirect compensation fading, and operating margin starting to replace it.
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