Dor Alon in 2025: lower revenue, higher margin, and a balance sheet that still needs air

Understanding The Company

Dor Alon is no longer just a fuel-station company. It is a broader operating and retail platform built on three clear engines: stations and fueling with convenience and charging, direct marketing of fuels, diesel, gas and jet fuel, and a food-and-retail layer through am:pm, BBB, Kapoa Zen and Alonit stores in kibbutzim and moshavim. Above all of that sits a growing real-estate layer, with 23 income-producing properties and about 195 thousand square meters of approved office, retail and parking rights. In plain terms, this is no longer only a liters story. It is a company trying to extract more profit from every stop, every visit, and every service layer built around the station.

That is also why a first pass through 2025 can mislead. Revenue fell 5.5% to NIS 6.39 billion, so it is easy to conclude that the year was soft. That is the wrong takeaway. Under the revenue line, the picture improved: gross profit rose 10.1% to NIS 1.213 billion, operating profit rose 20.5% to NIS 248.9 million, and EBITDA rose 6.2% to NIS 519.8 million. What carried the year was not excess volume. It was better economics inside the station network, convenience, and food.

But the active bottleneck is not operations. It is funding, and the question of how much of the value being created is actually accessible to common shareholders now. The company ends the year with NIS 1.647 billion of equity and, as of March 24, 2026, a market cap of NIS 3.366 billion, alongside an A2 stable rating. That sounds comfortable. In practice, it also ends 2025 with a working-capital deficit of about NIS 591 million, an explicit need for additional financing during 2026, and liquidity that looks impressive at the headline level but is mostly tied to a securities portfolio. Cash itself stood at NIS 46.3 million at year-end, with another NIS 27.2 million in short-term deposits. Most of the rest was about NIS 791.3 million of marketable securities.

That is the core of the story. What is working now is the retail layer and the broader business mix. What is still unresolved is the funding layer, the quality of part of net profit, and the company’s need to keep refinancing and building the next stage without overburdening the balance sheet. That is why 2026 looks less like a harvest year and more like a bridge year with a proof burden.

The quick economic map looks like this:

One more point matters early. Since the second quarter of 2024, the business has been managed through three divisions: fuels, food, and real estate. That is not a cosmetic organizational change. It is management acknowledging that the economic engine has moved away from a pure volume race and toward a structure in which each layer has to prove profit, cash generation, and capital discipline on its own. Anyone still reading Dor Alon only as a fuel marketer is reading an older company.

Events And Triggers

The station network is no longer selling only fuel

The first trigger: the station layer has become a better business than the revenue line suggests. Convenience sales rose about 6% to about NIS 565 million, and in the fourth quarter alone they rose to NIS 144 million from NIS 126 million a year earlier. At the same time, the fast and ultra-fast charging network kept expanding and reached 227 charging points, up from 173 at the end of 2024. Electricity sales also climbed to 11.1 million kWh from 7.7 million kWh in 2024.

That is not a side metric. A station with charging, coffee, convenience, and repeat traffic looks economically different from a station living only on the fuel margin. Dor Alon is building a recurring-visit layer here, with more cross-sell opportunities and less sensitivity to the price of a single liter.

Food grew fast, but has not yet proved the full economics

The second trigger: food was the standout growth engine in 2025. Segment revenue rose to NIS 954 million from NIS 709 million, and operating profit more than doubled to NIS 24.2 million from NIS 11.4 million. am:pm itself grew sales to NIS 464 million from NIS 456 million, but the more important number is that same-store sales, including franchisees, rose 6.2%. In other words, the business improved faster than the reported sales line suggests, because some stores were transferred to a franchise structure.

At the same time, not all of that growth is equal in quality. Kapoa Zen, whose acquisition was completed in June 2025, contributed about NIS 251 million of revenue in its first consolidated year, but only about NIS 2 million of operating profit. BBB contributed about NIS 4 million of operating profit. That means food clearly added footprint and volume, but the next proof point needs to be margin, not just scale.

Direct marketing has still not recovered enough

The third trigger: the weakest part of 2025 was direct marketing. Revenue fell to NIS 2.547 billion from NIS 2.896 billion, while operating profit was almost flat at NIS 54.0 million. Inside that segment the picture is clear: revenue from the Palestinian Authority fell to NIS 1.157 billion from NIS 1.410 billion, jet-fuel revenue fell to NIS 814 million from NIS 875 million, and Dorgaz revenue slipped slightly to NIS 275 million from NIS 282 million.

That weakness matters not only because the segment is large, but because it still explains part of the market’s discomfort with Dor Alon. At the end of 2025, the Palestinian Authority owed the company about NIS 559 million. Management says payments were continuing as usual as of the approval date, but this is still a material exposure worth keeping in view.

Series T improved the debt schedule, not the whole story

The fourth trigger: right after year-end, the company issued Series T for gross proceeds of NIS 336.8 million, at a fixed annual rate of 4.5%, non-linked, with principal spread across 2028, 2029, 2033, 2034, and 2035. That matters because it extends tenor, adds a non-linked layer, and slightly reduces the immediate funding pressure around 2026.

But precision matters here too. Series T improved the debt structure. It did not eliminate the need for additional funding. The company explicitly says that because of real-estate investment, expected transactions, and 2026 maturities, it will need further financing sources during the year.

Efficiency, Profitability, And Competition

The central story of 2025 is the shift from a business reporting less revenue to a business extracting more margin. Revenue fell by NIS 370 million, but gross profit rose by NIS 111.5 million, operating profit rose by NIS 42.4 million, and net profit almost doubled to NIS 248.2 million. That did not happen by accident. It came from a mix of lower energy prices, smaller inventory losses, a better activity mix, and stronger economics in retail and food.

Still, the business improvement needs to be separated from accounting and financial support. A large part of the jump in net profit came from the move from net finance expense of NIS 71.1 million in 2024 to net finance income of NIS 60.3 million in 2025. That swing came from gains in the securities portfolio, and it matters a lot for earnings quality. Anyone reading only the bottom line gets a picture that is too clean.

Where the real improvement came from

In stations and commercial fueling, revenue fell to NIS 3.177 billion from NIS 3.425 billion, yet operating profit rose to NIS 169.4 million from NIS 138.2 million. That is a 22.6% operating-profit increase in a segment whose revenue fell 7.2%. The main reason is that the company extracted more profit from convenience, from traffic inside the station, and from the broader service layer, while inventory losses also fell to about NIS 3.9 million from NIS 8.5 million in 2024.

In food, the improvement was even sharper, but the two-sided reading matters. On one side, operating profit rose rapidly. On the other, the Kapoa Zen acquisition added far more volume than margin. So 2025 is better than it looks at first glance, but it still does not prove that all of the new growth has already converted into durable economics.

In direct marketing, the picture is the reverse. Operating profit was almost preserved despite a double-digit revenue decline, which does suggest some operating discipline, mainly at Dorgaz. But this remains a business with weaker pricing power, higher volume sensitivity, and more exposure to customers and channels that can shift quickly.

The real competition is no longer only about fuel pricing

Fuel remains a competitive market, but Dor Alon is trying to play a different game. A network of 214 public stations, 168 convenience and cafe locations, 59 am:pm stores, 101 BBB restaurants, and 23 supermarket and Alonit points in kibbutzim and moshavim creates a platform where the customer meets the company in more than one place. That does not remove competition. It does create a better protective layer against a world in which all value is determined only by the weekly fuel margin.

Put differently, Dor Alon in 2025 is more competitive as a service-and-retail platform than as a pure fuel company. That is why profitability can improve even in a year when revenue declines.

The bottom line is still prettier than the core operating economics

Alongside all of that, one yellow flag remains around earnings quality. EBITDA rose to NIS 519.8 million, but cash flow from operations fell to NIS 424.0 million from NIS 635.0 million. Part of that gap comes from working-capital movements and part from the effect of paper gains, and it is a reminder that 2025 profitability is more real than the revenue line suggests, but less clean than the net-profit line suggests.

Cash Flow, Debt, And Capital Structure

The normalized cash picture

If the question is the underlying cash-generation power of the standing business, Dor Alon still looks reasonable. Adjusted EBITDA rose to NIS 293.0 million from NIS 265.7 million, and adjusted operating profit rose to NIS 177.7 million from NIS 155.7 million. The station, convenience, and food layers are entering 2026 from a better base.

But the normalized picture is only half the story. Cash flow from operations fell to NIS 424.0 million, partly after a roughly NIS 39.9 million increase in receivables and a roughly NIS 19.4 million increase in inventory. It is still positive cash flow. It is simply nowhere near enough on its own to explain the year’s full cash needs.

The all-in cash picture

This is where the story becomes much sharper. On an all-in cash flexibility basis, meaning after actual cash uses rather than only the standing business, 2025 was not a self-funded year. The company generated NIS 424.0 million from operations, but also invested NIS 423.4 million in investment property, NIS 92.0 million in fixed assets, NIS 10.5 million in intangibles, NIS 93.6 million in the Kapoa Zen acquisition, paid NIS 167.0 million of lease principal, and distributed NIS 100 million in dividends. Even before bringing bond and loan repayments into the picture, this cash layer was already stretched.

That is exactly why 2025 leaned on financing activity. The company raised a net NIS 671.6 million from bonds and increased short-term borrowing by about NIS 457.5 million, while also repaying NIS 443.0 million of bonds and NIS 122.6 million of long-term loans. This is not a distress signal. It is a sign that 2025 was managed as a financing bridge year rather than as a year finishing the investment cycle.

Where liquidity really sits

The company shows about NIS 865 million of liquid assets at year-end, but anyone stopping at the total misses the structure. Of that amount, about NIS 791.3 million is marketable securities, NIS 46.3 million is cash and cash equivalents, and NIS 27.2 million is short-term deposits. So liquidity exists, but it does not look like a thick operating cash cushion. A large part of it sits in the investment portfolio that also helped finance income this year.

Debt is not tight, but the time structure still needs work

The good news is that this is not a covenant-break story. For Series H, equity-to-assets stood at 24.08% versus a 12% floor, and equity itself stood at NIS 1.647 billion versus a NIS 535 million floor. In the bank covenants, net debt to adjusted EBITDA after the company’s operating adjustments stood at 1.83 versus a ceiling of 4.8. Even short-term credit lines of about NIS 1.1 billion were only about 67% utilized at year-end.

The issue is not covenant stress. It is debt timing and the need to finance investment, real estate, and maturities at the same time. The company itself explains that the working-capital deficit mainly reflects short-term funding of Aloni Yam, IFRS 16 classification, and reliance on the ability to term out some of that funding. So the key 2026 question is not whether Dor Alon is within its covenants. It is whether it can rearrange the funding stack without damaging operating flexibility.

Outlook

The four findings that should lead the 2026 view are these:

• 2025 was a year of real operating improvement, but not a year in which the balance sheet became clean.
• The stations, convenience, and charging layer is stronger than the revenue line suggests.
• Food added footprint and revenue, but still needs to prove a better margin profile.
• The big 2026 question sits in funding, real estate, and whether the company can get through the year without the financial layer swallowing the operating improvement.

What could work already in the near term

The encouraging part is that the company is not entering 2026 from an operationally weak position. Stations are producing more profit, convenience keeps growing, the charging network is already large enough to matter as a service layer, and am:pm is posting strong same-store sales. That creates a better starting point for the year.

The real-estate layer can also provide support, at least at the value level. Aloni Yam is already at the stage where the structure is complete, most systems work and basement and public-area finishes are done, and completion of the current built phase is expected in the third quarter of 2026. Aloni Kfar Saba has already received Form 4. These are not yet full cash contributions to shareholders, but they do explain why management keeps talking about value creation rather than only about station operations.

What is still unresolved

At the same time, management is explicit that uncertainty remained even after year-end. In March 2026, during the military operation noted after the balance-sheet date, fuel-station sales had still not returned to pre-operation levels as of the approval date. Food was described as not materially affected, jet fuel as not materially affected, and the Palestinian Authority activity as only marginally affected so far. The implication is that operating pressure is not dramatic right now, but it also has not fully disappeared.

One more point to watch is the funding effect of the securities portfolio. This year the company benefited from finance gains that made the bottom line look especially strong. If that environment reverses, or if the portfolio stops contributing at the same level, the gap between the business improvement and reported net profit will become more visible.

What kind of year this is

2026 looks like a bridge year with a proof burden, not a clean breakout year. For the story to improve, Dor Alon needs to show four things almost at once: that stations, convenience, and charging keep improving profitability even without unusually supportive energy pricing, that food can improve margin after the Kapoa Zen acquisition, that the Palestinian Authority remains a collectible receivable rather than a credit event, and that the 2026 debt arrangement does not hurt flexibility.

If that happens, the market could start treating Dor Alon more like a retail-and-services platform with a manageable real-estate and funding layer. If not, the company may remain in a place where every real operating improvement is quickly reburied under questions about funding, securities gains, and value that still is not accessible.

Risks

The first risk is not a covenant, but funding

The main risk around Dor Alon right now is that the need for additional financing during 2026 arrives in a less friendly environment. At year-end 2025 the covenants still looked comfortable, but the company remains dependent on extending debt, terming out some short funding, and continuing to finance investment and real estate without burdening the operating base.

The Palestinian Authority remains a material exposure

A receivable of about NIS 559 million from the Palestinian Authority is too large a number to ignore. Payments were continuing as of the approval date and there was no material change in the balance, but this is still a meaningful exposure even if it has not yet turned into a visible problem.

Earnings quality is still sensitive to the capital market

Finance gains in 2025 materially improved the reported bottom line. That is not an accounting problem, but it is definitely an analytical one. If the contribution from the securities portfolio falls, net profit could look much less impressive even if the underlying business keeps improving.

Real estate creates value, but also absorbs cash

Aloni Yam, Aloni Kfar Saba, and the broader real-estate layer support the value-creation narrative. At the same time, they also explain part of the pressure on cash and on the timing structure of debt. Value created in real estate does not automatically equal cash that is accessible to common shareholders.

Commodity and FX exposure is not fully open, but it is not gone either

The company hedges part of its dollar exposure through forwards on fuel and gas obligations and orders, totaling about $170 million as of the approval date. After year-end it also entered 1,200 short Brent futures for September through November 2026. That means the exposure is not unhedged, but it also means the bottom line will remain sensitive to energy prices, FX, and hedging choices.

Conclusions

Dor Alon ends 2025 in better shape than its revenue line suggests. The station, convenience, charging, and food engines are working better, and operating profitability improved clearly. The main blocker remains funding, the quality of part of net profit, and the company’s need to get through 2026 without the balance sheet swallowing the operating improvement.

Current thesis: Dor Alon is gradually becoming a more profitable retail-and-services platform rather than a pure fuel platform, but 2026 will still be decided mainly by whether funding, real estate, and the legacy exposures remain under control.

What changed: A year ago it was easier to read the company through revenue volume and fuel exposure. After 2025 it is clearer that value is being built in convenience, food, charging, and real estate, while the weaker layer remains direct marketing and the funding structure around it.

Counter-thesis: The market may be right to stay cautious, because a meaningful part of the 2025 improvement came from the funding layer and the securities portfolio rather than from core operations, while the company still needs additional financing, carries a working-capital deficit, and has material exposure to the Palestinian Authority.

What could change the market reading: Quarters in which station and convenience profitability keeps improving, Kapoa Zen begins to show better margin, and debt financing goes through without pressure could change the picture quickly. By contrast, weakness in the securities portfolio, a funding delay, or deterioration around the Palestinian Authority exposure would bring the skepticism back immediately.

Why this matters: If Dor Alon can turn 2025 into a base year rather than an exceptional year, it will come out of 2026 with a stronger retail engine and a better business mix. If not, it will remain a company creating value across several layers but struggling to turn that value into a clean and simple common-shareholder story.

What must happen over the next 2 to 4 quarters: the company needs to keep lifting profitability in stations and convenience, show that Kapoa Zen contributes to margin rather than only revenue, keep the Palestinian Authority receivable under control, and complete additional 2026 financing without materially damaging balance-sheet flexibility.