Sugat Cash Flow 2025: Did The Improvement Come From The Core Or From Trade Terms And Supplier Finance
Cash flow from operations rose to NIS 109.5 million, but the bridge tells a more qualified story. Most of the improvement came from working-capital timing, longer supplier terms and deeper supplier-finance usage, while customer terms also loosened.
What Actually Drove The Cash-Flow Jump
The main article already established two things at once: Sugat’s operating core improved, but the 2025 headline was also inflated by the RMI effect. This continuation isolates a different question: what really sat behind the jump in cash flow from operations to NIS 109.5 million from NIS 61.8 million a year earlier.
The right framing here is not a normalized cash figure before working capital. It is the operating-cash bridge itself. How much came from the business before working-capital changes, and how much came from trade terms, suppliers, customers and other current-balance-sheet lines. On that basis, the picture is fairly sharp: most of the 2025 improvement did not come from a cleaner core cash-conversion engine. It came from working capital.
Once the cash-flow bridge is split into those two layers, the headline almost flips. The profit-plus-adjustments layer before working-capital changes came to only NIS 62.5 million in 2025, down from NIS 75.7 million in 2024. By contrast, working-capital changes added about NIS 47.0 million in 2025 after subtracting NIS 13.8 million in 2024. Put simply, the full year-over-year improvement in operating cash flow, and more than that, was explained by current-balance-sheet conditions rather than by a parallel step-up in the core cash engine.
That is the right starting point. 2025 does not read like a year in which Sugat simply learned to convert profit into cash at a structurally better rate. It reads like a year in which working capital, especially the supplier side, gave the cash line a larger push.
Where Working Capital Actually Moved
The bridge shows that the story is not one-dimensional. Customers absorbed NIS 10.8 million of cash, inventory released NIS 10.3 million, suppliers added NIS 12.9 million, and payables, accruals and provisions added another NIS 30.3 million. So even inside the working-capital improvement itself, this was not a single-lever story.
What matters most is the relationship between the three lines that speak directly to trade terms. On one side, receivables rose to NIS 191.0 million from NIS 180.2 million, and the board report explicitly says higher customer credit was mainly driven by changed trade terms with several customers. The receivables note points in the same direction: average customer credit in the fourth quarter rose to 74 days from 69 days in the comparable period.
On the other side, suppliers and service providers rose to NIS 136.1 million from NIS 121.8 million, and supplier days in Israel and abroad increased to 66 from 57. So supplier-side terms also stretched, and by more. That is why cash improved despite some loosening on the customer side as well.
But this is where a quick read can still go wrong. In the board discussion, average supplier credit for full-year 2025 barely moved, NIS 128.9 million versus NIS 128.1 million in 2024. Average customer credit, meanwhile, rose to NIS 185.6 million from NIS 179.7 million. That means the supplier-side relief is more visible in the year-end position and in credit days than as a broad funding tailwind that ran evenly through the whole year. That is another reason not to treat the NIS 109.5 million operating-cash figure as a clean new run-rate.
| Indicator | 2024 | 2025 | What it says |
|---|---|---|---|
| Cash flow from operations | NIS 61.8 million | NIS 109.5 million | The headline improved sharply |
| Layer before working-capital changes | NIS 75.7 million | NIS 62.5 million | The pre-working-capital core actually weakened |
| Working-capital change | Negative NIS 13.8 million | Positive NIS 47.0 million | This is where the jump sits |
| Average customer credit | NIS 179.7 million | NIS 185.6 million | Customer terms loosened |
| Q4 customer days | 69 days | 74 days | Collections stretched as well |
| Average supplier credit | NIS 128.1 million | NIS 128.9 million | Little change across the full year |
| Supplier days | 57 days | 66 days | Year-end cash relied on longer supplier terms |
That table matters because it shows both forces working at once. Sugat gave more time to part of its customers, and also enjoyed longer timing on the supplier side. The difference is that by year-end, suppliers funded the picture more than customers did.
Supplier Finance Is No Longer A Footnote
Note 17 is the center of this follow-up. Sugat runs supplier-finance arrangements that allow suppliers to receive payment from banks up to 60 days before the original invoice due date, while Sugat itself repays the banks on the original date. From an accounting perspective, the company stresses that its legal obligation has not changed materially, that the trade liabilities do not bear interest, are not secured and are not subject to covenants or cross-defaults, and therefore remain classified within suppliers and service providers rather than as bank debt.
That accounting distinction is fair, but economically it still tells an important story. By the end of 2025, liabilities included in supplier-finance arrangements had risen to NIS 45.5 million from NIS 36.5 million a year earlier. Inside that amount, the portion already paid to suppliers by banks increased to NIS 31.7 million from NIS 19.6 million. In addition, almost one-third of the total supplier balance, 33.4%, was already sitting inside those arrangements at year-end.
The maturity ranges support the same read. Liabilities inside supplier-finance arrangements fall due in 60 to 75 days, while comparable suppliers outside the program fall due in 30 to 60 days. So not all of the increase in supplier days reflects ordinary commercial bargaining power. Part of it sits on top of a bank-backed funding rail that effectively extends the supplier line.
Another important detail is the facility size. Banks were allowed to prepay invoices up to a cumulative NIS 28 million, and by year-end 2025 the company had received temporary approval for an additional roughly NIS 3 million of over-limit usage. This does not look like a marginal tool the company barely touches. It looks like an active working-capital instrument that was being used close to its ceiling.
The claim here is not that Sugat is hiding bank debt inside suppliers. The company explicitly says the legal obligation did not change materially, and that has to be respected. The narrower claim is different: 2025 cash flow was shaped not only by what happened on the shelf and in the factory, but also by a more active supplier-finance setup.
This Is Not A Liquidity-Stress Story. It Is A Cash-Quality Story
To keep the read balanced, the other side matters too. This does not look like a liquidity crunch. Sugat ended 2025 with NIS 103.1 million of cash and cash equivalents, and in the liquidity-risk note the company cites roughly NIS 355 million of unused short-term credit facilities. In the supplier-finance note itself, management also says the group does not face a significant liquidity risk from these arrangements, partly because of their limited size and partly because the company has access to other funding sources on similar terms.
In other words, the issue here is not whether Sugat could meet its obligations. The issue is how to read the quality of this year’s operating cash flow. The board discussion explicitly says ongoing activity is funded by equity, cash flow from operations, supplier credit and short-term credit. Supplier finance is therefore not a side detail. It is part of the company’s own funding architecture for the operating model.
The implication for 2026 is straightforward. If supplier days stop stretching, if supplier-finance usage stabilizes, and if customer days remain looser, the operating line will have to do more of the heavy lifting to keep cash flow at a similar level. On the other hand, if customer collections tighten back up and inventory stays under control, part of the 2025 improvement may prove to be a successful bridge rather than just a year-end push.
Conclusion
The answer to the headline question is not binary, but the direction is fairly clear. Sugat’s cash-flow improvement in 2025 did not come mainly from a stronger core conversion engine. In the bridge itself, it came mostly from working-capital changes, led by longer supplier terms, deeper supplier-finance usage, and at the same time somewhat easier customer terms that absorbed part of the benefit.
That matters because NIS 109.5 million of cash flow from operations can look, at first glance, like proof that the business already converts profit into cash at a new structural rate. The more accurate read is more modest: Sugat improved 2025 cash not only through the core, but also through funding architecture and trade terms. Because the post-IPO balance sheet is stronger, this is not a liquidity warning. It is mainly a question of quality and repeatability. The next test is whether Sugat can keep cash flow strong without another stretch on the supplier side.
Disclosure: Deep TASE analyses are general informational, research, and commentary content only. They do not constitute investment advice, investment marketing, a recommendation, or an offer to buy, sell, or hold any security, and are not tailored to any reader's personal circumstances.
The author, site owner, or related parties may hold, buy, sell, or otherwise trade securities or financial instruments related to the companies discussed, before or after publication, without prior notice and without any obligation to update the analysis. Publication of an analysis should not be read as a statement that any position does or does not exist.
The analysis may contain errors, omissions, or information that changes after publication. Readers should review official filings and primary sources before making decisions.