Aran R&D: How Much of 2025 Profit Came From Upstream, and How Much Came From the Industrial Core
The main article already showed that defense demand is strengthening Aran's operations. This follow-up breaks 2025 profit into three layers: NIS 22.1 million from Upstream, NIS 10.6 million from the industrial core, and within Upstream itself a NIS 16 million milestone-related gain that explains why the year's earnings quality looks different from the headline.
The main article already showed that defense demand improved Aran's operating picture, but not its earnings quality. This follow-up takes the NIS 32.7 million of 2025 pretax profit and asks a narrower question: how much of it really came from the group's industrial core, and how much came from Upstream.
For that breakdown, the segment note is the cleanest place to start. In 2025 total segment profit was NIS 32.632 million, almost identical to consolidated pretax profit of NIS 32.659 million. The gap, only NIS 27 thousand, is negligible. In other words, almost the entire question sits inside the three operating engines themselves, not in headquarters or financing noise.
First Cut: Upstream Created The Headline, The Industrial Core Created Only A Third
On the reported view, the answer is blunt. The investments and startup segment, which in practice rested almost entirely on Upstream in 2025, generated NIS 22.1 million of pretax profit. The two industrial segments together, design, development, and manufacturing on one side, and equipment and raw materials on the other, generated only NIS 10.6 million.
| Engine | 2025 revenue | 2025 segment result | Share of group pretax profit |
|---|---|---|---|
| Design, development, and manufacturing | NIS 110.2 million | NIS 0.4 million | 1.2% |
| Equipment and raw materials | NIS 138.9 million | NIS 10.2 million | 31.1% |
| Investments and startups | NIS 14.3 million | NIS 22.1 million | 67.6% |
That also explains where almost the entire jump in profit came from. In 2024 Aran's industrial core already produced NIS 10.473 million of segment profit. In 2025 it produced NIS 10.560 million. In other words, at the pretax level the core barely moved. The group's jump from NIS 9.4 million to NIS 32.7 million was driven almost entirely by the startup segment moving from a NIS 0.827 million loss to NIS 22.072 million of profit.
That matters because it turns 2025 from a year of industrial earnings breakout into a year of highly concentrated profit expansion. The factories, production lines, and defense-facing activity carried revenue. They were not the layer that lifted the pretax line.
Inside Upstream, NIS 16 Million Came From The Milestone Gain
This is where the read needs one more level of depth. Aran's startup segment in 2025 is no longer a broad venture portfolio. During the year the company made no new investment, and as of the report date the only activity in the segment is Upstream, which manufactures the GoBack Catheter product for Bentley. All segment revenue is tied to that product, Bentley represents 100% of revenue in the segment, and the company had no additional new product or active new investment in the segment at the report date that could create an alternative earnings layer.
Inside that concentrated setup, the European regulatory milestone was achieved on November 19, 2025, and the related EUR 5 million payment was received on November 26, 2025. At the same time the group recognized a pretax gain of about NIS 16 million. That is the heart of the issue: about 72.5% of Upstream's segment result, and 49.0% of the group's total pretax profit, came from one discrete component tied to the milestone.
That does not cancel Upstream's ongoing activity. Quite the opposite. In 2025 Upstream recorded NIS 14.3 million of revenue and NIS 19.0 million of net profit, versus NIS 6.6 million of revenue and a negligible loss in 2024. Its production-capacity utilization also stood at 95% at the report date. But the numbers need to be read correctly: when a subsidiary's net profit is higher than its revenue, this is not a normal manufacturing year. It is a manufacturing year plus a capital event.
There is another layer the fast headline misses. Upstream is only 67.1% owned, so not all of its profit climbs to Aran shareholders. In 2025 NIS 6.266 million of Upstream's profit was attributed to non-controlling interests. So even inside Upstream's peak year, part of the earnings stayed at the minority layer.
Once The Milestone Is Neutralized, The Picture Flips, But Not Fully In Favor Of The Defense Engine
The natural analytical adjustment is to explicitly strip out the NIS 16 million milestone-related gain. After that adjustment, Upstream is left with roughly NIS 6.1 million of segment profit. At that point the picture flips: the industrial core, at NIS 10.6 million, becomes larger than Upstream.
But even here it would be a mistake to stop halfway. That industrial core is not one clean block. Almost all of its profit came from the equipment and raw-material segment, NIS 10.159 million. The design, development, and manufacturing segment, the one that is supposed to carry the defense story, finished the year with only NIS 401 thousand. So even after stripping out the milestone, 2025 still does not become a proof year for the defense engine. It becomes a year in which the distributing and recycling industrial segment was stable, Upstream added a decent ongoing layer, and the one-off event is what created the earnings headline.
That distinction matters much more than the simple split between Upstream and the core. Anyone who neutralizes the milestone and then concludes that the defense-facing business has already proved strong profitability is reading too fast. The cleaner read is that the company currently rests on a mix of relatively profitable industrial distribution, design and manufacturing activity that is still too thin, and a medical contribution that remains highly concentrated.
What This Means For 2026
Upstream's supply and distribution agreement was extended through September 30, 2026, and the company estimates that, based on 2025 production levels, the additional production period could generate about NIS 10 million of revenue and about NIS 4 million of net profit at Upstream, of which about NIS 3 million would be attributable to Aran Dgamim. As of the report date there is also no backlog in this segment, only the commitment to manufacture for Bentley through the end of September 2026. That is a positive contribution, but it also sets a clear frame: even on the company's own numbers, Upstream's recurring layer is much smaller than its reported 2025 contribution.
That is why the right read of next year is not whether Upstream disappears, but whether the industrial core starts carrying more weight. On that test there are really two separate questions. First, can the design, development, and manufacturing segment turn the 2026 defense backlog and orders into a margin that is far above NIS 401 thousand. Second, can the equipment and raw-material segment hold roughly NIS 10 million of profit even while it expands its recycling, waste-separation, and distribution activity.
Bottom line: in 2025 Aran did not earn mainly from the industrial core. It earned mainly from Upstream, and inside Upstream mainly from Bentley's milestone. After stripping that component out, the industrial core becomes larger again, but not because the defense engine already looks clean and powerful. It becomes larger mainly because of the equipment and raw-material segment. That is exactly why 2025 earnings quality still requires caution.
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