Spuntech: How Much Of 2025 Cash Flow Really Came From The Business, And How Much Came From Working-Capital Release

The Number That Looks Too Good on First Read

The main article already flagged Spuntech's sharp cash-flow recovery. This follow-up isolates only one question: how much of the NIS 64.7 million of operating cash flow really came from the business itself, and how much came from working capital being released on the way.

To answer that, two cash frames need to be kept side by side. The first is a normalized frame that measures the cash the business produced before working-capital movements, meaning net income plus non-cash adjustments minus cash taxes. The second is the reported frame, where inventory, receivables, and payables also move the number. Those are not the same conclusion.

On the reported basis, operating cash flow rose to NIS 64.7 million from NIS 27.9 million in 2024. But on the normalized basis, cash generated by the business before working capital fell to about NIS 49.6 million from about NIS 56.0 million. Put differently, the business itself did not generate more cash in 2025. What changed was mainly the direction of working capital.

That chart is the core of the entire continuation. In 2024 working capital absorbed about NIS 28.0 million of cash. In 2025 it added about NIS 15.1 million. That alone explains an improvement of about NIS 43.1 million, more than the full increase in reported cash flow. Against that, cash generated by the business before working capital actually weakened by about NIS 6.4 million.

The Business Itself Did Not Produce More Cash

The base numbers are straightforward. Net income fell to NIS 11.2 million from NIS 14.6 million. Total non-cash adjustments also fell, to NIS 41.4 million from NIS 47.7 million. After cash taxes, normalized cash generation before working capital dropped to roughly NIS 49.6 million.

That matters because it is easy to look at the cash-flow line and assume that better operating profitability immediately translated into a stronger cash engine. That would be the wrong read. In 2025 Spuntech showed better reported cash flow, but not a stronger cash base before working capital. So if the question is whether the business has already proven it can generate materially more cash on its own, this number still does not prove it.

The cash framing also matters here. This is a normalized cash-generation read, not an all-in cash-flexibility read. In other words, the immediate question is not how much cash remained after every actual use of cash, but how much the business itself produced before inventory, customers, and suppliers moved the result. On that basis, 2025 did not improve.

Almost All of the Improvement Came From Inventory, but Even That Was Not Fully Clean

Inventory is the line that did almost all the work. In 2024 inventory absorbed NIS 54.4 million of cash. In 2025 it released NIS 42.4 million. That alone created a swing of about NIS 96.8 million between the two years.

But even that line should not be read too mechanically. Inventory fell to NIS 114.1 million from NIS 169.3 million, a decline of about NIS 55.2 million. At first glance that looks like a classic inventory release. In practice, management explains that the decline was also affected by shekel strength versus the dollar and euro, which reduced inventory value by about NIS 13 million during 2025, as well as by changes in raw-material prices in original currency and by mix changes.

The number that really sharpens the point is inventory days. Raw-material inventory days rose to 67 from 65, while finished-goods days fell to 42 from 49. In other words, the decline in inventory value did not come from a broad-based reduction of the operating buffer. It leaned much more on lower finished goods and on nominal value erosion than on tighter raw-material discipline.

The inventory note reinforces the same reading. Raw materials fell to NIS 56.7 million from NIS 82.6 million, and finished goods fell to NIS 57.4 million from NIS 86.6 million. But if raw-material days still moved up, it is hard to argue that the whole decline there reflects clean operating release. Part of it was simply lower value.

That distinction matters because an inventory release driven by lower prices or by FX translation is not the same type of cash flow as an inventory release driven by faster production turnover or tighter control of stock levels. The former can disappear quickly if currency or input prices move the other way.

Customers Did Not Release Cash, and Suppliers Funded Less

If inventory did almost all the heavy lifting, the next step is to ask what the other working-capital lines did. Here the picture becomes even sharper. Customers did not fund the improvement, and suppliers pulled part of it back.

On the customer side, the cash-flow statement shows an NIS 8.4 million increase in receivables and another NIS 0.4 million increase in other receivables. In other words, customers consumed cash. That remains true even when looking at credit policy: average customer-credit days actually improved to 48 from 51, and average customer credit declined to NIS 85.7 million from NIS 93.8 million. The implication is not that the company loosened terms to support sales. It is the opposite: customers were not the engine behind the 2025 cash improvement.

On the supplier side, the picture is more of a drag. Suppliers and service providers consumed NIS 19.0 million of cash after contributing NIS 7.1 million in 2024. The average credit metrics also moved backward: average supplier days fell to 53 from 63, and average supplier credit fell to NIS 72.6 million from NIS 84.9 million. At year end, supplier credit received fell to NIS 61.3 million from NIS 85.6 million. Management's explanation is technical but important: more raw-material purchases were made on CIF terms, so the inventory and the liability were recognized when the goods were released from customs, relative to the 2024 year-end position.

| Working-capital line | 2024 impact | 2025 impact | Change between years | |-----|------|-------| | Receivables and other receivables | NIS 23.5 m | (NIS 8.8 m) | (NIS 32.3 m) | | Inventory | (NIS 54.4 m) | NIS 42.4 m | NIS 96.8 m | | Suppliers | NIS 7.1 m | (NIS 19.0 m) | (NIS 26.1 m) | | Other payables | (NIS 4.2 m) | NIS 0.5 m | NIS 4.7 m | | Total working capital | (NIS 28.0 m) | NIS 15.1 m | NIS 43.1 m |

That table shows how concentrated the cash-flow story really was. There was no broad-based improvement across working capital. Not in customers, not in suppliers, and not in other payables. Almost the entire move from drag to support came from inventory.

So How Much Really Came From the Business, and How Much From Working Capital

The precise answer depends on the frame. If the question is how much cash the business generated before working capital, the answer is about NIS 49.6 million. If the question is how much working capital added on top of that, the answer is about NIS 15.1 million. At the level of the year itself, that means roughly three quarters of operating cash flow came from the business before working capital, and roughly one quarter came from working capital.

But that is not the most important number. The more important question is where the recovery came from relative to 2024. Here the answer is much sharper: almost all of the improvement in reported cash flow came from the reversal in working capital, while the cash base before working capital actually weakened.

Even on an all-in cash-flexibility basis, the NIS 64.7 million headline quickly looks less dramatic. After net investing cash outflow of NIS 20.6 million, lease-principal repayment of NIS 5.8 million, and actual interest paid of NIS 12.3 million, only about NIS 25.9 million remained. Before new borrowing, and after NIS 76.0 million of long-term loan repayments, the picture no longer looks like an especially strong cash year. That does not negate the improvement. It does put it back into proportion.

Bottom Line

This continuation does not say that Spuntech's 2025 cash flow was unreal. It does say that its quality was less clean than the headline suggests. The business itself did not generate more cash than in 2024. What pushed the line higher was mainly inventory release, and inside that release sat both FX-driven value erosion and lower finished-goods days, while raw-material days actually rose and suppliers funded less.

That makes the 2026 test fairly clear. If Spuntech can keep cash flow healthy without another material inventory release, and without continuing to lose supplier credit, the read on 2025 improves a great deal. If inventory rebuilds or the currency stops helping, a large part of the 2025 cash-flow recovery will turn out to have been mostly a balance-sheet timing story.