Multi Retail: How Much Of 2025 Cash Flow Is Actually Repeatable
Multi Retail ended 2025 with NIS 142.1 million of operating cash flow and NIS 63.0 million after stripping out lease principal, but NIS 42.1 million of that jump came from working-capital release. Once full lease cash, CAPEX, and bank amortization are brought back in, the room to maneuver looks much tighter.
What This Follow-up Is Isolating
The main article already argued that Multi Retail repaired the balance sheet faster than it repaired demand. This follow-up isolates the question left open by the headline numbers of NIS 142.1 million of operating cash flow and NIS 63.0 million after stripping out lease principal: how much of 2025 cash came from economics that can repeat, and how much came from a working-capital release that has already been harvested.
Three numbers frame the issue immediately. First, operating cash flow improved by NIS 50.4 million versus 2024. Second, working capital shifted to a positive NIS 42.1 million contribution, from a negative NIS 20.7 million a year earlier, a NIS 62.8 million swing that is larger than the full cash-flow improvement. Third, in the same year operating profit fell to NIS 32.2 million from NIS 40.9 million, and net profit fell to NIS 4.7 million from NIS 11.4 million.
That leads to the key point. 2025 cash flow improved despite weaker profit, not because profit improved. That does not make the improvement fake. It does mean the analysis has to separate cash generated by the underlying retail operation from cash generated by inventory release and working-capital management.
| Key number | 2024 | 2025 | Why it matters |
|---|---|---|---|
| Operating cash flow | NIS 91.7m | NIS 142.1m | the headline is strong, but it does not explain cash quality on its own |
| Working-capital contribution to cash flow | NIS 20.7m outflow | NIS 42.1m inflow | this is the main source of the year-on-year improvement |
| Cash after lease principal | NIS 13.3m | NIS 63.0m | this is the number pushed by management and the presentation |
| Total negative cash flow from long-term leases | NIS 96.2m | NIS 96.5m | this is the heavy cash claim that sits behind the headline |
| Year-end lease liabilities | NIS 428.5m | NIS 381.8m | the balance sheet improved, but leases still dictate the cash profile |
Where The 2025 Cash Actually Came From
The basic 2025 bridge is clear. Net profit was NIS 4.7 million. Non-cash adjustments added NIS 95.3 million. On top of that, changes in working-capital lines added another NIS 42.1 million, which is how operating cash flow reached NIS 142.1 million.
What matters more than the total is the composition of that working-capital block. Most of the contribution came from inventory, with a NIS 43.6 million reduction. Receivables added another NIS 6.7 million. On the other side, suppliers and other service providers consumed NIS 6.1 million of cash, and other payables consumed another NIS 1.5 million. This was not a cash-flow year built on stretching payables. Most of the improvement came from releasing inventory while payables were actually a modest use of cash.
The non-obvious point is that the cash improvement did not even overlap with better earnings quality. If working capital is neutralized and the lens is limited to profit plus non-cash adjustments, 2025 generated only NIS 100.0 million before working capital, versus NIS 112.4 million in 2024. In other words, the underlying cash engine before working capital weakened, and inventory release is what turned the year into a strong headline cash year.
The Working-Capital Release Looks Real, But It Does Not Automatically Repeat
To judge whether this was purely one-off or also partly structural, the right place to look is working-capital days rather than only the December balance sheet. Inventory days fell to 141 from 149. Supplier days rose to 120 from 113. Customer days rose to 5 from 4. The average operating working-capital deficit improved to NIS 34.0 million from NIS 43.6 million in 2024.
There are two separate messages here. On the one hand, the inventory reduction is real, not cosmetic. Inventory at company sites fell to NIS 94.6 million from NIS 136.2 million, and inventory in transit fell to NIS 18.8 million from NIS 20.8 million. That fits the closure of weak stores, the smaller Beitili format, and the early exit from the Ashdod logistics center, whose annual operating cost was estimated at roughly NIS 3 million. So part of the improvement probably is a real change in how much inventory the chain needs to operate.
On the other hand, a NIS 43.6 million inventory release cannot repeat every year. Once inventory has already fallen to the new level, the following year no longer gets the same cash tailwind. It has to prove that the business can hold the leaner inventory base without losing sales and without rebuilding stock.
That means two opposite mistakes need to be avoided. The first is to say all of 2025 cash was one-off. That is not precise, because inventory days and the logistics structure did improve in fact. The second is to say the NIS 42.1 million working-capital contribution is now a recurring cash base. That is also not precise, because this amount represents a release that already happened.
NIS 63 Million Is An Intermediate Number, Not The End Of The Story
This is where two cash frames need to be separated. The first is the frame management itself uses when it talks about NIS 63.0 million: operating cash flow less lease principal. That is a legitimate lens if the goal is to neutralize the IFRS 16 distortion and look at the retail operation before the financing treatment of lease contracts.
The second, and more relevant one for flexibility, is the all-in cash picture. In that picture leases are not only principal. In 2025, total negative cash flow from long-term leases was NIS 96.5 million, almost unchanged from NIS 96.2 million in 2024. In addition, year-end lease liabilities still stood at NIS 381.8 million, with NIS 80.0 million current. Against that, bank loans were only NIS 20.7 million.
That is the gap between a convenient presentation lens and the full economics. The NIS 29.6 million net financial asset position is correct, but it is correct only excluding leases. The bank covenant is also defined without IFRS 16, which is why the tested ratio turned negative and the company passed comfortably. That explains why bank pressure fell. It does not change the fact that leases remain the chain’s dominant recurring claim on cash.
| Cash frame | 2024 | 2025 | What it says |
|---|---|---|---|
| Operating cash flow | NIS 91.7m | NIS 142.1m | the reported number |
| After lease principal | NIS 13.3m | NIS 63.0m | management’s IFRS 16-neutral lens |
| After full lease cash outflow | NIS 4.5m outflow | NIS 45.5m | a stricter view of what is left in the cash box |
| After full lease cash, CAPEX, bank amortization, and dividend | NIS 18.7m outflow | NIS 22.3m | what remained after the main actual cash uses |
This table shows that the 2025 improvement is real, but also how far it still sits from the first headline. Between NIS 63.0 million and NIS 22.3 million sit exactly the items that make a physical retailer more demanding than one cash-flow number suggests: leases, ongoing investment, loan amortization, and distributions.
How Much Of 2025 Cash Really Repeats
If the NIS 42.1 million working-capital contribution is removed and the question becomes what 2025 would have produced without another release from inventory and receivables, the picture gets much tighter. Operating cash flow falls from NIS 142.1 million to NIS 100.0 million. After lease principal, the NIS 63.0 million headline shrinks to NIS 20.9 million. After full lease cash it is only NIS 3.4 million. And after reported CAPEX of NIS 7.2 million, bank amortization of NIS 12.1 million, and the NIS 4.0 million dividend, the picture turns into NIS 19.8 million negative.
That is the line separating a real balance-sheet repair from truly repeatable cash generation. The 2025 balance-sheet improvement is not an illusion: cash rose to NIS 50.3 million, loans fell to NIS 20.7 million, and the covenant no longer looks like a pressure point. But the repeatability test has not yet been passed. For the story to become a recurring cash story, 2026 needs cleaner retail earnings, not another round of inventory release.
There is also a serious counter-thesis, and it is not weak. One can argue that part of the improvement should repeat because the chain is now structurally lighter: lower inventory, smaller-format stores, and one expensive logistics center removed. That is a fair argument. But even on that read, what repeats is a lower inventory intensity, not another NIS 40-plus million release from inventory itself.
That is why the next 2 to 4 quarters become a sharp test. Multi Retail does not only need to show that cash stays high. It needs to show that inventory does not rebuild, that sales do not suffer from the lower stock base, and that after leases and CAPEX there is still room to maneuver even without another balance-sheet gift.
Bottom Line
The 2025 cash-flow jump is real, but a large part of it does not repeat automatically. The main source of the improvement was working-capital release, especially inventory, while profit itself weakened. At the same time, leases did not disappear. They were simply excluded from the metric through which the company presents a net financial asset position and from the bank covenant through which it is measured.
So the right read is two-sided. On one side, Multi Retail’s balance sheet is genuinely more comfortable than before, and the company bought itself time and flexibility with the banks. On the other, anyone assuming that 2025 cash already represents a free and repeatable base is skipping too quickly over NIS 42.1 million of working-capital release and over NIS 96.5 million of annual lease cash outflow. 2026 will decide whether 2025 was a successful cleanup year, or the beginning of a new cash-generation economics.
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