Veridis: Infinia after white paper, how strong is carton really

The main article argued that carton was the sharpest operating change inside Veridis in 2025. This follow-up does not revisit the whole group. It isolates Infinia itself: what really changed after the white-paper exit, where the strength is genuine, and where 2025 profitability still rests on conditions that can move quickly.

The central point is narrower than the annual headline. Infinia has a better earnings base now, but that base is still incomplete. The carton segment ended 2025 with revenue of NIS 1.199 billion, segment profit of NIS 67.3 million, and EBITDA of NIS 259 million, versus NIS 1.118 billion, NIS 4.0 million, and NIS 187 million in 2024. That is a real step-up. But the core of the change, machine 4, produced only about 61 thousand tons in 2025 against potential annual capacity of about 140 thousand tons, and in the second half the company voluntarily stopped it for about 45 days because of weaker world demand for containerboard, global excess capacity, and US tariffs. So 2025 proves that carton can earn more. It does not yet prove that the new earnings level is already sitting on a stable floor.

Machine 4 Finished the Conversion Stage, Not the Proof Stage

What ended in 2025 was the engineering and integration phase. Infinia completed the adaptation, merger, and synergy work with the group’s existing activities, including workforce reduction steps that had already lowered carton costs from 2024 onward and improved operating flexibility. At the same time, machine 4 was fully converted from writing-and-printing paper to recycled paper rolls for carton, and white-paper production was shut in December 2025.

That is the heart of the move. Machines 2 and 8 together carry about 320 thousand tons of potential annual capacity, while machine 4 is meant to add about 140 thousand tons more. In practice, total containerboard output rose to about 357 thousand tons in 2025 from about 340 thousand tons in 2024. Even after a strong transition year, most of the future capacity gap is still ahead.

That chart is the cleanest way to read the situation. Even after the conversion was completed, machine 4 ran at less than half of its potential annual capacity in 2025. Management’s own forecast points to about 90 thousand tons in 2026, about 120 thousand tons in 2027, and full utilization of about 140 thousand tons from 2028. The key 2026 question is therefore no longer whether the line works technically. It is whether demand and pricing are strong enough to absorb the ramp without eroding the profit gains.

The investment profile reinforces that reading. The company invested about NIS 22 million in 2025 to complete the conversion project, and cumulative conversion cost has already reached about NIS 170 million. Most of the capital work is now behind it. The next test is commercial execution.

Infinia’s Strength Sits in the Chain, Not in Pricing Immunity

Infinia is stronger than a superficial read suggests, but the strength has to be defined correctly. It operates a relatively closed chain: Infinia Recycling collects carton and paper waste, Infinia turns that material into carton paper rolls, and Infinia Packaging turns those rolls into corrugated board and boxes. The company describes itself as the largest collector of carton and paper waste in Israel and one of the most significant recycling operators in the country. In carton-and-paper waste collection it estimates about a 60% market share, and in containerboard it is the only domestic producer in Israel.

That is a real operating advantage. It supports availability, broader control of feedstock, faster supply to customers, and a better service-and-credit offering. The local market data reflects that advantage as well: Infinia’s quantitative share in containerboard sales to the Israeli corrugating industry reached about 62% in 2025, up about 5% from 2024, mainly because the main customers increased their purchases.

But that is not the same as unconstrained pricing power. Containerboard is tradable, there are no import restrictions into Israel, and import availability is high. More importantly, the local corrugators already import paper rolls from abroad, so they are operationally equipped to switch between local supply and imports. In other words, Infinia enjoys the advantages of being the local supplier. It does not get to ignore the global paper price umbrella.

That distinction matters because 2025 can mislead. A move from NIS 4.0 million of segment profit to NIS 67.3 million can tempt the reader to conclude that Infinia has discovered a new pricing moat. That conclusion is too strong. What it has built is a more efficient cost position and a stronger local market position. The selling price is still disciplined by the import alternative and by world paper conditions.

Mix Matters More Than Capacity

If there is one datapoint that tells you whether Infinia is really moving toward a higher-quality earnings base, it is not capacity alone. It is where the added tons are going. Export sales are usually less profitable than local sales, mainly because transport cost sits on the seller. That is why the local mix matters more than any broad growth slogan.

In 2025 about 75% of the containerboard Infinia produced, around 268 thousand tons, was sold into the local market, versus about 71% in 2024 and about 66% in 2023. That improvement matters because it shows the carton ramp did not depend only on pushing excess tons abroad. In addition, about 26% of 2025 output was sold to Infinia Packaging itself as feedstock for board and box production, so a meaningful part of value stayed inside the chain.

Still, the picture is not entirely clean. Beyond Infinia Packaging, Infinia has three main local corrugator customers. The industry structure, one local producer versus a small number of customers and a dynamic global import market, leaves Infinia sensitive to customer purchasing volumes. That point matters more than it looks. It means the local strength is real, but it still rests on a relatively concentrated base.

At the same time, the quantitative volume sold to foreign customers was about 29% of total containerboard sales in 2025. The company says it can switch export destinations if needed, but it also acknowledges that such a switch may hurt export profitability. That is the difference between movable surplus volume and a truly stronger profit base. If the machine 4 ramp is absorbed mainly through export markets, the extra tons will not automatically carry the same economics as locally placed volume.

The White-Paper Exit Cleans the Story, but Does Not Solve It

Closing white-paper production is good news, but the reason matters. White paper had been stuck in a structurally weaker market for years: falling demand, price erosion, and easy import entry. That is why the company deliberately reduced writing-and-printing paper output through 2021 to 2025 in order to free up machine time and production resources for carton. White-paper output fell to about 36 thousand tons in 2025 from about 78 thousand tons in 2024, and production was shut in December 2025. From 2026 onward, the activity continues only through imported paper sales after the remaining 2025-produced inventory is supplied.

That means 2026 should start from a cleaner comparison base. Ending white-paper production caused about NIS 20 million of one-off costs in 2025. That cost should not recur. The structural drag of local white-paper manufacturing should also be off the table. It is the right move.

But that is not the same claim as saying every extra ton from machine 4 now drops straight to profit. In fact, the white-paper exit makes the carton question sharper. Until 2025, Infinia still contained a weak business that dragged the group down. From 2026, the remaining question is exposed more directly: can carton itself carry the added capacity at the right price?

The fourth quarter already gave an uncomfortable clue. Carton-segment revenue in Q4 2025 rose only slightly to about NIS 302 million from about NIS 300 million in Q4 2024. Even so, segment profit moved from roughly NIS 4 million to a roughly NIS 1 million loss, and EBITDA slipped from about NIS 56 million to about NIS 54 million. The explanation is straightforward: lower selling prices for carton paper. That tells you Infinia is more efficient than before, but not insulated from paper-price pressure.

The annual chart shows the improvement clearly, but it has to be read together with the fourth-quarter slip. The correct conclusion is not that 2025 was accidental. It is that 2025 was still a better transition year, not final proof of a new margin plateau. The white-paper exit removes noise. It does not remove carton cyclicality.

Bottom Line

Infinia after white paper looks stronger, leaner, and more focused. This is no longer a business trying to defend a shrinking white-paper market while building carton on the side. It is a business that has made its strategic choice, shut a loss-making production leg, and deepened its local carton position.

But that strength is still constrained by two very practical tests. The first is the capacity test: can machine 4 move from about 61 thousand tons in 2025 toward about 90 thousand tons in 2026 without further material idling and without leaning too heavily on export markets. The second is the pricing test: are the gains in efficiency and local-chain positioning enough to protect profitability when carton-paper selling prices fall, as they already did in the fourth quarter.

Bottom line: Infinia has built a better base than it had before, but anyone reading 2025 as a fixed new earnings level is moving too fast. Carton is stronger, white paper no longer blocks the plant, and the local advantage is clearer. What still has to be proven is that the next layer of machine 4 volume will be absorbed mainly where economics are better, in the local market, rather than mainly where volume is easier to place, in export channels.