Nissan In 2025: Cash Flow Came Back, But Shareholders Only Get Half The Profit

Getting To Know The Company

Nissan is no longer really a story about its old medical-dressing legacy. In practice it is now mostly a public wrapper around Spuntech, a spunlace nonwoven producer with five production lines, three in Israel and two in North Carolina, selling mainly into the wipes industry. In 2025 about 90% of the subsidiary's sales served wipes, about 96% of sales were outside Israel, and roughly 80.9% of revenue went to North America. So anyone reading Nissan as a small Israeli medical-products name is missing the real economic engine: a global, dollar-heavy manufacturing platform that lives on large customers, fiber pricing, FX and logistics.

What is working right now is fairly clear. Despite losing a major customer at the end of 2024, the company kept a large share of its major-customer base, signed or extended several meaningful supply agreements into 2026 to 2028, exited the year with a visibly better fourth quarter, and reported NIS 62.6 million of cash flow from operations versus NIS 26.8 million in 2024. On the balance-sheet side the picture is not one of immediate pressure either: long-term bank debt fell to NIS 83.3 million from NIS 109.1 million, the group still had NIS 51 million of unused credit lines, and financial covenants remained comfortably inside their limits.

But that is only one layer. The active bottleneck at Nissan is not whether the factories can produce. It is the quality of earnings and the distance between group profit and common-shareholder profit. In 2025 consolidated net income was NIS 8.7 million, but only NIS 4.2 million of that amount was attributable to Nissan shareholders, while NIS 4.5 million went to non-controlling interests. That is not a footnote. It is exactly why a look at consolidated profit, consolidated EBITDA or consolidated cash flow can feel better than the actual shareholder economics.

The market-cap read can also mislead on first glance. In early April 2026 the company traded around NIS 80 million, against attributable equity of NIS 193.7 million. It is easy to stop there and call it a discount. That is incomplete. Attributable equity was hit not only by operating weakness but also by a NIS 39.4 million comprehensive-loss effect from translating foreign operations, and the whole business remains highly exposed to the dollar, tariffs and customer concentration. So this is not just a simple book-value story. The real question is how much of the business actually reaches common shareholders, and how repeatable that flow is.

What a superficial read is likely to miss:

• Reported operating profit is higher than the operating result of the core business. The company reported NIS 23.1 million of operating profit, but before other income operating profit was only NIS 19.1 million. Most of the gap came from insurance proceeds after the US plant fire.
• The rebound in operating cash flow leaned heavily on working-capital release. Inventory reduction alone contributed NIS 42.4 million, or about 67.7% of cash flow from operations.
• The fourth-quarter rebound is real, but the comparison base was unusually weak. In Q4 2024 the company recorded a NIS 15.4 million revenue reduction from bad debt.
• The main problem in 2025 was not pure demand. Sales volume actually rose by about 1%, but shekel strength still cut revenue by NIS 45.8 million, gross profit by NIS 12.6 million and operating profit by NIS 14.35 million.

The economic map looks like this:

Anyone looking for a cleaner 2026 thesis has to define the hurdle correctly from the start: higher utilization without another customer shock, faster tariff and FX pass-through, and proof that the 2025 cash-flow recovery was not just a one-off inventory release.

Events And Triggers

The first trigger: 2025 was the year in which the tariff, FX and pricing combination moved from background risk into direct margin damage. In April 2025 the US imposed a 10% tariff on imports from Israel, and in August that rate rose to 15%. At the same time certain raw materials imported into the US were hit by tariffs ranging from 15% to 35%. After the February 2026 US Supreme Court ruling, the practical end-state was still a 10% tariff on imports of the company's products into the US. That matters because Nissan explicitly says it keeps uniform pricing for identical products coming from Israel and from its US plant, which means it could not fully pass the tariff burden through to customers.

The numbers are sharp. The company says the tariff program cut more than NIS 5 million from gross profit in the second half of 2025. At the US plant, raw-material costs rose by about $2 million, with most of that increase passed on to customers. But on exports from Israel to the US the company paid about $2.4 million of tariffs, roughly NIS 7.7 million, and had to absorb a meaningful share of that burden itself. That is the real 2025 story: not demand collapse, but weaker profit per unit sold.

The second trigger: in April 2025 a fire broke out in the energy room of the US plant, and the plant was shut down until May 4. The event hurt utilization, cost the company about NIS 1.5 million of deductible, and helped explain the yearly utilization drop from 86.17% to 82.33%. At the same time, in Q2 the company already recognized other income of about NIS 2.7 million for property damage and NIS 1.3 million for loss of profit. So 2025 includes both a real operating hit and an insurance offset that softened the reported P&L. Looking only at final operating profit misses that split.

The third trigger: late 2025 and early 2026 brought a sequence of major-customer renewals and extensions. On December 29, 2025 the company signed two agreements with Customer B, one extending the current agreement through end-2026 with expected 2026 revenue of about $24 million, and another covering a different product group for 2026 to 2027 with expected annual revenue of about $12 million and an option into 2028. On January 27, 2026 the agreement with Customer C was extended through end-2028, with expected supply of about $25 million, $23 million and $27 million in 2026, 2027 and 2028, respectively. Earlier, on June 30, 2025, the agreement with Customer D was expanded and extended for three years with expected annual supply of about $18.5 million. These are strong signs that the company has not lost the core of its major-customer base.

The other side matters just as much. The company itself says losing a major customer could require 4 to 6 quarters to replace. So the long contracts improve visibility, but they also highlight how heavily a small group of customers still shapes the economics of each year.

The fourth trigger: in 2025 the company bought land next to its US site and began constructing a main warehouse of about 9,000 square meters. The total expected cost is about $8 million, and by the report date the investment had already reached about $5.6 million. The warehouse is expected to begin operating in Q2 2026 and replace rented external storage. That can improve logistics and reduce friction in the supply chain, but it also explains why 2025 cannot be judged only through EBITDA.

The fifth trigger: FX earned its own section in 2025. The average dollar rate for the year was NIS 3.4529, versus NIS 3.69 in 2024, a drop of about 6.4%. The company says explicitly that shekel strength hurt gross profit, operating profit and other profit. Once that is combined with the fact that about 96% of sales are in foreign currency, and with a sensitivity table showing that a 10% move in the dollar changes pre-tax profit by about NIS 7.1 million and equity by about NIS 36.6 million, it becomes clear that 2025 was not just an operating year. It was also a currency year.

The fourth quarter was better, but it still does not prove that Nissan has entered a clean breakout year. It mainly proves the business stabilized after a weak first quarter, a plant fire and a full year of FX pressure.

Efficiency, Profitability And Competition

The central insight is that 2025 was not a demand-collapse year. It was a year in which the economic mechanics ran on worse terms. Revenue fell 1.9% to NIS 651.8 million, but the company says sold volume actually rose by about 1%. So the damage did not come from disappearing orders. It came from FX, tariffs and the fact that not every cost increase reached the customer quickly enough.

At the margin level the picture lines up. Gross profit fell 9.9% to NIS 88.4 million, gross margin fell to 13.6% from 14.8%, and operating profit fell 23.6% to NIS 23.1 million. But even here it is worth slowing down before drawing a neat conclusion. The NIS 23.1 million operating-profit number includes NIS 4.0 million of other income, mostly insurance compensation. Operating profit before that other income was only NIS 19.1 million. That matters because anyone treating NIS 23.1 million as purely organic operating profit is giving the ongoing business full credit for earnings that partly came from the insurer.

What Really Happened In Q4

Q4 2025 does support a more constructive read, but only up to a point. Revenue rose 8.1% to NIS 147.7 million, gross profit jumped to NIS 22.7 million from NIS 7.1 million, and operating profit swung to NIS 5.4 million from an operating loss of NIS 9.9 million in the comparable quarter. Utilization also improved to 87.5% from 81.6%.

The problem is that the comparison base was unusually weak. In Q4 2024 the company recorded a NIS 15.4 million revenue reduction from bad debt. So part of the sharp 2025 rebound is not only better operations but also an easier comparison. That does not cancel the recovery. It changes the interpretation. The more accurate read is that Q4 shows the business climbed out of a hole, not that it already built a new normalized earnings tier.

Mix, Pricing And Commercial Terms

Product mix shifted further toward disinfection and cleaning in 2025. That category rose to 35.3% of sales from 31.5%, while baby wipes fell to 53.4% from 55.2%. On one level that helps explain where demand was firmer. On another level, the company itself says there is no material difference in profit contribution among the product groups. So it is hard to build the thesis on a supposedly better mix alone. The main story is still price, FX, raw materials and utilization.

On paper the company does have protection mechanisms. With some customers it uses price-adjustment formulas tied to raw materials and freight, and raw-material changes can be passed through quarterly, semiannually or even monthly, depending on the customer. But 2025 shows this is not a full moat. Shekel strength cut NIS 45.8 million from revenue, NIS 12.6 million from gross profit and NIS 14.35 million from operating profit. So even when the company can reprice, there are time lags, commercial limits and market constraints that stop it from neutralizing everything.

Customer Concentration Is Both The Strength And The Weakness

Nissan has 81 active customers, but the top 10 account for 80% to 85% of sales, and the top 5 account for 65.1%. The four major customers disclosed in the report account together for 57.5% of revenue. The company also says 87.8% of 2025 sales came from customers with relationships longer than 5 years. That is the strong side of the story: long commercial relationships, technical integration and customers that stay for years.

But it is also exactly what limits flexibility. The company itself says losing a major customer could hurt results for 4 to 6 quarters. So the right thesis is not "customer loyalty means there is no risk." It is "customer loyalty makes the base sticky, but when the base cracks, the pain lasts."

So on competition the company is not failing. It is even managing to keep its place with major customers. But 2025 still showed that when FX, tariffs and utilization move against it, customer relationships are not enough to preserve full margin.

Cash Flow, Debt And Capital Structure

This is where two cash readings have to be separated. The first is reported operating cash flow. The second is all-in cash flexibility, meaning how much cash actually remains after real cash uses. At Nissan the gap between those two readings is large enough to change the conclusion.

At the headline level, 2025 looks good: NIS 62.6 million of cash flow from operations, versus NIS 26.8 million in 2024. But the layer below the headline is different. Inventory reduction contributed NIS 42.4 million, lower taxes paid added another NIS 3.3 million, and the company itself says the main driver was working capital. In other words, this is good cash flow, but not all of it is necessarily recurring cash generation.

If the view shifts to all-in cash flexibility, the picture is less clean. Start with NIS 62.6 million of operating cash flow, then subtract NIS 26.1 million of reported CAPEX, NIS 12.3 million of interest paid, NIS 5.8 million of lease principal, roughly NIS 10.0 million of net debt service after new borrowings, and NIS 16.5 million of dividends. On that bridge, 2025 did not leave a wide cash surplus. It left roughly a NIS 8.2 million shortfall. This is exactly where "cash flow came back" cannot be confused with "financial flexibility came back."

Inventory Fell, But Not Only Because Everything Suddenly Became Lean

Inventory fell to NIS 114.1 million from NIS 169.3 million. That is a big drop, but it still needs to be read carefully. The company explains the move through a combination of lower finished-goods quantities, changes in raw-material prices, mix changes, the US tariff program, and especially shekel strength against the dollar and the euro, which alone shaved about NIS 13 million off inventory value. So the inventory decline helped cash flow, but it was not entirely the result of cleaner operations.

Debt Came Down, And Covenants Look Comfortable

The good news is that the debt structure looks better than a year earlier. Short-term bank credit plus current maturities of long-term loans fell to NIS 139.7 million from NIS 145.2 million. Non-current bank debt fell to NIS 34.7 million from NIS 45.8 million. At year-end 2025 the group also had NIS 51 million of unused credit lines.

Spuntech and the US subsidiary remained well inside covenant limits:

That matters because it says financing is not the immediate problem at Nissan. The real issue is more about earnings quality and how much of the group result actually survives to the shareholder layer.

The Parent Layer Still Matters

There is also short-term bank credit at Nissan itself. The parent carries about NIS 12.5 million of short-term borrowing, secured in part by a pledge over 17.72 million Spuntech shares. The company is in compliance with the requirement that utilized credit not exceed 0.35 of the collateral value, so this is not an immediate red flag. But it is still an important reminder: even if the main production activity and the operating debt sit inside Spuntech, Nissan shareholders still face a parent-company layer when asking how much value is truly accessible to them.

Outlook And Forward View

Four findings should stay in mind before looking into 2026:

• Q4 improved, but part of that improvement came from an easy comparison base at the end of 2024.
• The new customer contracts improve volume visibility, but they do not by themselves guarantee cleaner margins.
• The new US warehouse is a real operating fix, but it comes with real capital spending, not immediate earnings.
• The 2026 test is less about revenue growth and more about the combination of utilization, price, tariffs and cash quality.

What Already Looks Supported

It is hard to ignore that the company enters 2026 with better commercial visibility. Customer B alone represents expected 2026 revenue of about $24 million plus another $12 million per year in a separate product group. Customer C now runs through end-2028 with explicitly stated annual supply expectations. Customer D was extended for three years at about $18.5 million per year. Put simply, the company comes into 2026 with less volume uncertainty than it had at the beginning of 2025.

There is also a basis for cautious operating optimism. Utilization in Q4 recovered to 87.5%, above the 82.33% full-year average, and the new US warehouse is supposed to replace rented storage from Q2 2026. This is not a glamorous catalyst, but it can still improve synchronization between raw materials, production and finished-goods logistics.

What Is Still Missing

What is missing is proof that better volume becomes better margin. 2025 already showed that the company can pass through part of its raw-material inflation, but not all of it and not in full time. It also showed that the policy of keeping a uniform price between Israel and the US protects customer relationships, but sometimes at the expense of gross margin. So 2026 is not an automatic breakout year. It is a proof year for operating quality: do the customer contracts, the new warehouse and the stable debt profile actually bring utilization and margin back onto a stronger path, even with a still-existing 10% tariff?

The market's short-term test is likely to be straightforward. It will ask whether the Q4 improvement continues without another unusually soft comparison base, whether operating profit before other income starts to climb rather than only reported operating profit, and whether 2026 cash flow still looks good without another large inventory release.

What Has To Happen Over The Next 2 To 4 Quarters

First, utilization needs to move above the 2025 level and stay there, not just touch a good quarter once. Second, the new contracts need to show up not only in volume but in price. Third, the new warehouse needs to start reducing real logistics friction rather than remaining mainly a CAPEX line. Fourth, cash flow needs to stay positive even if the inventory tailwind fades.

If all of that happens, 2026 can begin to look like a stabilization year with genuine improvement. If not, the market will keep reading Nissan as a company that can manufacture and sell, but has not yet fully translated that operating success into cleaner shareholder economics.

Risks

The first risk is customer concentration. The top 5 customers account for 65.1% of sales, and the company itself says losing a major customer could hurt results for 4 to 6 quarters. The new contracts improve visibility, but they also deepen dependence on a small customer group.

The second risk is FX. About 96% of sales are outside Israel, mostly in North America and Europe, and all group sales are primarily in dollars and euros. The report's own sensitivity table shows that a 10% move in the dollar affects pre-tax profit by about NIS 7.1 million and equity by about NIS 36.6 million. The company executed only 6 forward transactions in 2025 and recognized a gain of NIS 564 thousand, so the hedge is partial at best.

The third risk is tariffs and trade policy. As of the report date there was still a 10% tariff on imports of the company's products into the US, and some raw materials imported into the US were subject to tariffs of 15% to 35%. Even if part of that inflation is passed to customers, 2025 already proved the pass-through is not perfect.

The fourth risk is cash quality. 2025 operating cash flow looked good, but much of the improvement came from inventory reduction. If 2026 cannot show good cash flow without another big working-capital release, investors will go back to asking how much of the improvement was truly recurring.

The fifth risk is supply chain and war. The company says explicitly that continued activity in Israel depends on the proper functioning of Israeli ports, and that prolonged war could weigh on manpower, raw materials, shipping routes and costs. That is not abstract macro commentary. For a company whose key raw materials for Israel are imported, it is a direct operating constraint.

The sixth risk is supplier concentration. The top three fiber suppliers accounted together for 81.4% of fiber purchases in 2025. The company says it generally has no supplier dependence because there are many manufacturers in the market, but the number still deserves respect. In a disrupted trade or tariff environment, that concentration could become a real issue faster than usual.

Conclusions

Nissan leaves 2025 with two messages that look contradictory but actually fit together. On one side, the business did not break. Q4 improved, operating cash flow came back, debt came down, and new contracts provide decent visibility into 2026 to 2028. On the other side, this is still not a clean shareholder thesis. Reported profit includes an insurance benefit, more than half of net income went to minorities, and a large share of cash recovery came from inventory release rather than only from steady earning power.

Current thesis: Nissan in 2025 looks like an operating business that stabilized, but not like an equity story that already solved the gap between factory recovery and shareholder earnings.

What changed: At the start of 2025 the story was a mix of a lost customer, a plant fire and operating pressure. By year-end the story had shifted to better commercial visibility and a stronger fourth quarter, but with a new test around margin quality and cash quality.

Counter-thesis: A more constructive read says the market is too harsh, because the new contracts, improving utilization and the new US warehouse already create the base for better margins in 2026, while an around NIS 80 million market cap gives too little credit to a manufacturing business with NIS 193.7 million of attributable equity.

What could change the market's reading in the short to medium term: continued utilization improvement, a quarter in which operating profit before other income rises clearly, and evidence that tariffs and FX are being absorbed less heavily at the gross-margin line.

Why this matters: because at Nissan the question is not whether there are machines, customers and contracts. The real question is how much of that economics actually survives through minorities, FX and tariffs to reach the shareholders of the listed company.

What has to happen over the next 2 to 4 quarters is also fairly clear. Utilization needs to return to a better path without another exceptional event, the new contracts need to show up not just in volume but in margin, and cash flow needs to remain positive without another unusual working-capital tailwind. What would weaken the thesis is the opposite path: a persistent tariff burden, a weak dollar, no real margin repair, and cash flow that again depends on working-capital movements rather than cleaner earnings.