Had-Asaf 2025: imports returned, margins compressed, and the pressure moved to the balance sheet
Had-Asaf ended 2025 with revenue down about 10% and net income down more than 50%, but the deeper story is the shift from margin pressure to balance-sheet pressure. Inventory, receivables, and on-call bank funding absorbed almost all the cash and turned 2026 into a proof year.
Getting to Know the Company
At first glance, Had-Asaf looks like another steel name tied to construction activity. That is too shallow. In practice, this is an industrial group with deep vertical integration in Israel, starting with scrap purchasing and processing, moving through melting and rolling, and ending with the sale of raw and processed steel products to contractors, traders, and steel processors. On top of that sit a Romanian trading arm, a building-complements business, and a smaller layer of ancillary activities.
The 2025 story is also not just "a weak year for the sector." The real issue is the sharp transition from an unusually favorable year to one that forces the company back into base economics. In 2024, Had-Asaf benefited from an unusual setup: trade restrictions involving Turkey supported local demand, selling prices rose, and scrap prices fell. In 2025 that setup reversed. Imports came back through other countries, prices compressed, and the pressure moved from the margin line to the balance sheet.
What is still working now? The complementary-products activity in Israel remained stable and grew, Romania moved from a segment loss to a segment profit, and the company still sits on NIS 777.8 million of equity with very wide covenant headroom. What is still not clean? Heavy working capital, a very large receivables book, and short-term variable-rate funding just as the fourth quarter already slipped into a net loss.
That also shapes the current screen for investors. Based on a last share price of NIS 43.94 and 12.29 million shares outstanding, the market cap is around NIS 540 million. But the latest trading session showed only about NIS 1.2 thousand of turnover. So even if the thesis improves, tradability remains a real practical constraint.
| Activity | 2025 external revenue | Approx. share of revenue | 2025 segment profit | What actually matters here |
|---|---|---|---|---|
| Steel reinforcement production in Israel | NIS 1,614.8m | about 87% | NIS 53.9m | This is the core profit engine, and also where the margin compression happened |
| Romania | NIS 129.7m | about 7% | NIS 0.7m | A real improvement versus 2024, but still a very thin profit pool |
| Building complements | NIS 99.9m | about 5% | NIS 4.0m | Relatively stable support activity, but not thesis-defining on its own |
| Other | NIS 10.4m | below 1% | NIS 1.4m | Background noise, not a thesis driver |
That chart frames the company correctly. 2025 did not just fall against 2024. It almost erased the margin expansion of the unusually strong prior year. Operating margin fell back to 3.24%, nearly identical to 3.34% in 2023, even though the balance sheet is now heavier and short-term funding is larger.
Another useful layer is product mix. Raw rebar was 44% of revenue in 2024 and fell to 30% in 2025. That is not just a demand issue. It also reflects a change in mix and in the types of transactions that carried the unusually strong year.
The implication is simple: Had-Asaf is not just a manufacturer. It is a system that constantly manages the trade-off between local production, imports, inventory, customer type, and credit terms. That is why the right read of 2025 has to connect profitability, working capital, and funding structure, not stop at the earnings line.
Events and Triggers
The Turkish windfall faded
Trigger one: 2025 was the year 2024 unwound. The company says that in the first quarter of 2025 the strong sales momentum continued, mainly because raw rebar volumes sold rose by about 58% versus the comparable quarter. But from the second quarter onward the picture changed: imports into Israel increased through countries such as China and Greece, and over the final nine months of 2025 volumes sold fell by about 18% versus the comparable period. At the same time, selling prices fell by 9%.
That matters because the compression did not come from one factor alone. It came from a mix of lower volume, lower selling prices, and a weaker dollar. The company itself says steel-segment selling prices fell by 6% in 2025 and the share of imported raw materials in cost of sales rose to 56%, versus 52% a year earlier. In other words, the model was already shifting toward more imports and less advantage from local production.
The 2025 exit rate was weaker than the annual headline suggests
Trigger two: anyone reading only the full-year net income line, NIS 30.8 million, misses the exit rate. The company earned NIS 21.8 million in the first quarter, NIS 12.8 million in the second, nearly flatlined at NIS 1.0 million in the third, and then posted a NIS 4.7 million net loss in the fourth quarter. At the operating line, the fourth quarter already slipped to a NIS 0.1 million loss.
That turns 2026 into a proof year, not just a potential recovery year. The market will first ask whether the fourth quarter was a temporary trough, or whether it already reflects a lower and weaker earnings run-rate.
Romania improved, but it is not fully de-risked
Trigger three: Romania improved meaningfully. Revenue there rose 48% to NIS 130 million, and the activity moved from a NIS 9.3 million segment loss in 2024 to a NIS 0.7 million segment profit in 2025. That improvement was driven by the expansion of local trading activity after production had been cut back in prior years.
But this is still a fragile engine. The company explicitly says the steel inventory there is exposed to price changes, and that import quotas from outside the EU are expected to be cut by 50% on July 1, 2026. So the support engine of 2025 enters 2026 with a clear new test.
Post-balance-sheet events help, but they do not change the thesis on their own
Trigger four: after year-end, a NIS 5 million dividend was approved at the associate Had Atir, and on February 10, 2026 the company sold its full holding in Had Atir for about NIS 4.5 million. In addition, on March 25, 2026 a NIS 3 million dividend was approved at Had Zamir, of which NIS 1.2 million belongs to non-controlling interests.
These are positive portfolio-management events, but they need to be kept in proportion. Against NIS 332 million of short-term bank debt, NIS 470.2 million of inventory, and NIS 438.3 million of net receivables, they do not change the funding picture by themselves.
Governance: more continuity than strategic change
Trigger five: in March 2026, Avi Zamir was appointed as a regular director after previously serving as an independent director for nine years until January 2024. This looks more like continuity and institutional familiarity at board level than a signal of a strategic reset.
Efficiency, Profitability, and Competition
The central point in 2025 is that the drop in revenue was relatively modest, about 9.9%, while the hit to profitability was much sharper. Gross profit fell 24.1%, operating profit fell 47.1%, and net income fell 56.1%. This is not just a weaker top line. It shows that the operating model stopped benefiting from the unusual 2024 conditions while the cost base and funding burden remained heavy.
The Israeli steel segment still drives the whole story
| Segment | 2025 revenue | 2024 revenue | Change | 2025 segment profit | 2024 segment profit | What this means |
|---|---|---|---|---|---|---|
| Steel reinforcement in Israel | NIS 1,614.8m | NIS 1,870.4m | down 13.7% | NIS 53.9m | NIS 116.9m | The core engine lost almost half its profit |
| Romania | NIS 129.7m | NIS 88.2m | up 47.1% | NIS 0.7m | loss of NIS 9.3m | Better, but still a thin margin pool |
| Building complements | NIS 99.9m | NIS 88.7m | up 12.7% | NIS 4.0m | NIS 3.9m | Relatively stable activity |
In the Israeli steel segment the company lost both price and volume. Segment sales fell 14%, and the company explicitly attributes that to lower volumes and lower selling prices. Customer mix also shifted: raw rebar sales to processors and traders fell to 43% of segment sales from 58% in 2024, while the relative weight of sales to building contractors rose.
That matters for two reasons. First, it helps explain part of the rise in customer days, because the company itself links that increase to the shift from fewer sales to traders and processors and more sales to contractors. Second, it shows that 2024 was not a stable new base, but a market dislocation that changed both the customer mix and the pricing environment.
The operating advantages remain, but they are not enough on their own
Had-Asaf still has real strengths. It runs a full production chain in Israel, from scrap through melt and roll to processed products, has operational reach in both the north and south, and also maintains an import arm that lets it shift weight between local manufacturing and imports based on economics. According to the filing, the scrap-processing plant, melt shop, and rolling mill all operate at around 70% of potential capacity.
But there is also a yellow flag here. In May 2025 the company signed an agreement to upgrade the melt shop, an investment intended to raise potential capacity by about 50%. The company explicitly states that this investment is not expected to increase total actual output without additional investments that have not yet been approved. So today’s CAPEX does not buy tomorrow’s step-function in throughput. It buys an option.
Romania is a real improvement, but not a defensive wall
Romania is no longer the story of a factory struggling to keep production alive. Starting in 2020 the company changed strategy there, scaled back steel wire and cable manufacturing, and focused more on raw steel trading and fencing mesh. That worked better in 2025, but the quality of the improvement matters: according to the filing, about 88% of Romanian revenue comes from trading activity.
That means the Romanian improvement comes from a lighter model that is easier to expand, but also more exposed to quotas, raw-material pricing, and trading spreads. It helps the group picture, but it does not change the fact that group profitability is still decided in Israel.
There is no backlog cushion here
Another point that separates Had-Asaf from project-based names is that there is no meaningful contracted backlog cushioning the forward read. The company says the Israeli plants generally do not have binding orders that remain unrecognized, because delivery times are short and sales are executed from inventory. In plain terms, the next filings will be driven less by an existing order book and more by real-time market conditions.
That sharpens the competition test. In raw rebar the company competes both with imports and with Yehuda’s local production. In processed products it competes with many local processors. So any improvement in profitability will have to come from pricing discipline, inventory management, service, and speed of delivery, not from a convenient contractual backlog.
Cash Flow, Debt, and Capital Structure
This is the heart of the story. 2025 did not break on covenants. It broke on cash flow. The company ended the year with NIS 30.8 million of net income, but only NIS 7.1 million of cash flow from operations. Almost the entire gap sits in working capital.
Working capital swallowed the year
Operating working capital rose to NIS 761.8 million, versus NIS 697.4 million in 2024. More importantly, its weight rose to 41% of revenue versus 34% a year earlier. This is not a growth effect. Revenue fell, yet working capital still expanded.
The company breaks this down clearly: customer days rose to 64 from 57, inventory days rose to 102 from 85, and supplier days stayed flat at 17. On the balance sheet that means NIS 438.3 million of net receivables, NIS 470.2 million of inventory, and NIS 100.8 million of payables.
There are also details inside those lines that matter. Within inventory, work in process jumped to NIS 72.9 million from NIS 28.5 million in 2024. In receivables, average credit days rose to 74 from 67. Most importantly, the auditor identified receivables as a key audit matter because net receivables equal 32% of total assets.
That does not prove a collection problem. The company actually reduced the doubtful-debt provision to NIS 30.0 million from NIS 34.1 million. But it does mean the key accounting and business question is collection quality, not just sales volume.
Cash framing: all-in cash flexibility
The cash framing has to be explicit here. Since the central issue is financing flexibility and the need to fund working capital, the right frame is all-in cash flexibility, meaning how much cash remained after actual cash uses during the year.
Cash flow from operations was NIS 7.1 million. Against that stood NIS 51.5 million of reported fixed-asset purchases, NIS 18.7 million of advances for fixed assets, NIS 11.7 million of lease principal repayment, and NIS 0.8 million of dividends paid to non-controlling interests. Before additional bank funding, the picture is roughly negative NIS 75.6 million.
That is exactly what showed up in financing. Net short-term bank borrowings increased by NIS 63.4 million, almost the same order of magnitude as the gap between operating cash generation and actual cash uses.
Debt: not tight versus covenants, but still dependent on the banks
At year-end the company had NIS 332.0 million of short-term bank debt, all at variable rates. The average rate on short-term borrowings during the year was 5.784%, and the year-end short-term borrowing rate was 5.28%. The company’s sensitivity analysis shows that a 0.5% rise in prime would affect profit by about NIS 2.45 million.
The character of the funding also matters. The company has on-call lines from three banks totaling about NIS 700 million, but it explicitly says these lines are not committed in writing. True, year-end utilization is not high relative to the total line, and covenants are nowhere near stressed: equity is NIS 777.8 million against a minimum of NIS 200 million, and equity-to-assets is 57% against a minimum of 30%.
But this is exactly the difference between technical financial risk and business quality. The immediate problem is not a covenant problem. It is that the company is funding heavy working capital through short-term, non-committed borrowing just as core margins are compressing.
FX: relief on one side, pressure on the other
The dollar works both ways here, but the company is explicit that a weaker dollar has an overall negative effect on its results. Imported raw materials get cheaper, but imported competing steel gets cheaper too, so local selling prices come under pressure. During 2025 the dollar fell 12.5% against the shekel, and that move coincided with returning imports and pricing pressure in the market.
Outlook
Before getting into the details, four non-obvious findings need to be pinned down:
- 2025 exited much weaker than the annual headline suggests. The fourth quarter had already moved into a net loss and an operating loss.
- Romania does not solve the core problem. It is too small and too thin relative to the compression in the Israeli steel segment.
- The melt-shop upgrade is an operating option, not an approved throughput step-up. The company itself says additional investments would still be needed.
- There is no contracted backlog protecting 2026. The next few filings will be driven mainly by market pricing, demand, and the company’s ability to release working capital.
2026 looks like a proof year
The right label for 2026 is a proof year. Not a breakout year, and not a reset year. The company needs to prove three things at the same time: that the fourth quarter did not mark a persistently lower earnings level, that working capital can shrink without damaging sales, and that Romania’s improvement can survive a tougher quota environment.
There are positives. The rate environment at the start of 2026 is slightly easier than at the end of 2025. Equity is still strong. The complementary-products segment remains stable. And there is no immediate covenant threat. But none of that changes the fact that the 2025 exit rate was already weak, and that steel sales in Israel remain exposed to import pricing, the dollar, construction demand, and customer-credit terms.
What must happen over the next 2 to 4 quarters
The first hurdle is margin. The Israeli steel segment needs to move away from the fourth-quarter exit rate and restore a reasonable operating margin even without the exceptional tailwind seen in 2024.
The second hurdle is working capital. A decline in inventory days and customer days will matter at least as much as any revenue improvement, because that is the only way to show earnings are flowing back into cash.
The third hurdle is Romania. In 2025 it acted as a partial offset to the margin pressure. From July 1, 2026, when import quotas are due to be cut by 50%, the company will have to show the improvement there was not temporary.
The fourth hurdle is CAPEX. The market will need to see that the investments in technological improvement and potential capacity are starting to produce operating efficiency, not just additional cash uses.
Risks
The biggest risk is cycle quality
Had-Asaf’s central risk today is not balance-sheet collapse. It is a continued deterioration in cycle quality. In Israel the company sells on 60 to 120 days of credit, generally without meaningful collateral and without customer-credit insurance. That is normal enough for the sector, but it becomes less comfortable when net receivables stand at NIS 438.3 million, average credit stretches out, and the line item becomes a key audit matter.
Inventory and imports can hurt even without a revenue drop
Inventory already stands at NIS 470.2 million, and the company itself warns about sharp price declines in the metals market. That means even if revenue stays reasonable, a meaningful shift in import pricing or scrap pricing could damage inventory value and gross margin.
Funding is short, floating, and not written down
Financially, the company depends on the banking system to fund working capital through on-call lines that are not committed in writing. That is not necessarily an immediate threat, but it does mean operating flexibility rests on continued bank support, not just on the accounting ratios.
Romania could shift from a small help to a small drag
Romania’s improvement invites an optimistic reading, but it is worth remembering that the improvement rests mainly on trading, not on a deep industrial moat. The quota cut in July 2026 could turn a small support engine into a small pressure point. That would not redefine the whole group, but it could erase part of the relief seen in 2025.
Background risks have not disappeared
The company remains exposed to environmental regulation, business licensing, intense competition, and the security situation. These were not the main 2025 story, but in an industrial business with plants, imports, and construction exposure, they are always part of the picture.
Conclusion
Had-Asaf reaches the end of 2025 as a company that still has real assets, real operating integration, and strong equity on paper, but also as a company the market has to read differently now. What supported it in 2024 was unusual. What blocks a cleaner read today is not one line item but the combination of compressed margins, heavy inventory, longer receivables, and short-term variable-rate funding. In the near term, market interpretation will depend mainly on whether 2026 brings working-capital release and a more stable earnings profile, or just a continuation of the weak fourth-quarter exit rate.
| Metric | Score | Explanation |
|---|---|---|
| Overall moat strength | 3.5 / 5 | Vertical integration, operational reach, and flexibility between local production and imports are real strengths, but not a moat that neutralizes price competition |
| Overall risk level | 3.5 / 5 | The risk is not covenant pressure but operating and cash-flow quality: working capital, short-term funding, and sensitivity to price and cycle |
| Value-chain resilience | Medium | The company controls a meaningful part of the production chain in Israel, but still depends on scrap, imports, and outside market conditions |
| Strategic clarity | Medium | The direction is understandable, but part of the investment program still creates option value rather than immediate real output |
| Short-seller stance | 0.02% of float, SIR 0.21 | Short interest is negligible and far below the sector average, so it is not adding a strong negative market signal right now |
Current thesis in one line: Had-Asaf entered 2026 as a steel company with a strong balance sheet on paper, but with a core business that still has to prove margin, inventory, and collections can start working together again.
What changed versus the earlier reading: 2024 now looks more like an unusually supportive year than a new earnings base, and 2025 showed that the return to normal hits both earnings and cash.
The strongest counter-thesis: the market may be reading 2025 too harshly. A moderate improvement in demand, rates, and inventory turns may be enough to bring the company back to a reasonable earnings level without a deep structural change.
What could change the market reading in the short to medium term: a real improvement in inventory days and customer days, together with better profitability in the Israeli steel segment, would matter much more than headlines about "investment" or "potential."
Why this matters: in an industrial company that funds a large working-capital base through short-term borrowing, business quality is measured by the ability to turn revenue into cash, not only into accounting profit.
What must happen over the next 2 to 4 quarters for the thesis to strengthen, and what would weaken it: for the thesis to improve, the company needs to show the fourth quarter was not the start of a lower structural earnings band, that working capital is being released, and that rates and trading spreads are no longer eroding profitability. What would weaken the read is more quarters of soft profitability while inventory and receivables stay heavy.
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Romania turned profitable in 2025, but at this stage it still looks more like a temporary trading-spread story than a proven recovery engine: 88% of revenue already came from trading, segment profit was only NIS 0.7 million, and import quotas are due to be cut by about 50% from…
In 2025, Had-Asaf did not lose only margin. It also lost cycle speed. Receivables stretched, inventory days jumped, supplier funding did not offset the change, and the cycle ended up being closed through short-term on-call bank debt rather than through internal cash generation.