Rav-Bariach's Locking Segment: Plenty of Patents, Almost No Profit
Rav-Bariach still presents the locking segment as a story of technology, patents, and exports, but in 2025 external revenue slipped to ILS 64.4 million and operating profit fell to just ILS 30 thousand. That is no longer a cosmetic gap. It is a commercialization problem.
The main article argued that Rav-Bariach's consolidated recovery still does not settle the question of earnings quality and cash quality. This follow-up isolates the place where the story should have looked better: the locking segment. This is supposed to be the part of the business that benefits from technology, patents, exports, and smart products. In practice, 2025 external revenue fell to ILS 64.4 million, adjusted EBITDA fell to ILS 11.9 million, and operating profit was reduced to just ILS 30 thousand.
That is the gap that matters. The presentation continues to sell a story of exports to about 50 countries and more than 40 patents. The more detailed business description talks about a technology- and regulation-intensive activity, 38 registered patents and 23 applications in process in locking, a smart-lock management app launched in 2025, and a new product line with facial recognition, fingerprints, and digital codes. But at the bottom line, the segment is still failing to convert that narrative into a profit premium.
The most important datapoint is not a dramatic collapse in sales. It is the fact that even after a year of investment, launches, and much higher factory utilization, almost no profit remained. In 2025 utilization at the locking plant rose to 85%, versus 53% in 2024. That is the kind of number that should support operating leverage. Instead, the segment remained close to break-even at the operating line.
| Metric | 2023 | 2024 | 2025 | What it means |
|---|---|---|---|---|
| Total revenue | 63.1 | 76.3 | 74.1 | After a jump in 2024, 2025 slipped modestly |
| External revenue | 52.3 | 66.7 | 64.4 | The decline in 2025 came in the channel that reflects real market demand |
| Gross profit | 12.4 | 16.7 | 17.5 | Gross profit still improved, so the problem is not just headline pricing |
| Adjusted EBITDA | 15.3 | 12.2 | 11.9 | Better gross profit did not convert into EBITDA growth |
| Operating profit | 4.1 | 1.9 | 0.03 | Profitability was almost fully eroded here |
| Depreciation | 11.4 | 10.2 | 11.8 | The segment's asset base consumes almost all of EBITDA |
What actually deteriorated
The first misleading number is gross profit. It actually rose in 2025 to ILS 17.5 million from ILS 16.7 million in 2024, and gross margin improved to 23.6% of revenue from 21.9% a year earlier. Anyone stopping there could conclude that the segment is moving in the right direction.
But that is only half the picture. Adjusted EBITDA fell in 2025 to ILS 11.9 million, after ILS 12.2 million in 2024 and ILS 15.3 million in 2023. In other words, even when gross profit improves, the pre-depreciation operating earnings do not really expand. Then depreciation rises back to ILS 11.8 million and almost wipes out the entire EBITDA line. The result is operating profit of just ILS 30 thousand. Not ILS 30 million, not ILS 3 million, but effectively zero.
That is the core issue. The problem in locking is not a lack of technology. The problem is that the segment still does not generate economics that justify the technology story. If the plant is already operating at 85% utilization in 2025, and if the company is already talking about smart products, a live app, and a new product line, the operating outcome should have looked much better than this.
The three-year view makes the point even clearer. From 2023 to 2025, total segment revenue rose 17%, external revenue rose 23%, and gross profit rose 41%. But adjusted EBITDA fell 22%, and operating profit fell 99%. That is no longer just noise from one quarter or one side item. It suggests a business that can still generate activity, but still cannot hold onto strong economics on that activity.
Exports exist, but they are still not a strong enough economic engine
This is where the gap between story and reality becomes the sharpest. On one side, the segment operates in about 40 countries, works through exclusive distributors, also sells under OEM structures, and has a key UK customer, Avocet. The company says cooperation with Avocet grew from thousands of cylinders to hundreds of thousands of units between 2021 and 2023, and that the trend continued and even intensified in 2024 and 2025. The locking plant also met the export ratio required for the tax benefit in both 2024 and 2025.
On the other side, the company itself estimates its locking-market share in Israel at about 35%, while its overseas share is still not material. That sentence brings the story back to earth. A company can be present in dozens of countries, can maintain a distributor network, and can even meet an export threshold for tax purposes. But if overseas market share is still not material, exports have not yet become a profit engine capable of reshaping the segment's economics.
The operating backdrop has also turned less forgiving. The company explicitly says that rising production and exports from the East into European markets are increasing competition and affecting selling prices. At the same time, it says copper, a key raw material for locking, rose sharply from late 2025, while the war and the Red Sea disruption materially lengthened raw-material supply times and raised freight costs. So the international channel is not only too small. It is also operating in a tougher pricing and logistics environment.
That is the datapoint that sharpens the concern. If utilization rises that strongly and external revenue still declines, it is hard to argue that the segment is simply one step away from lift-off. A cleaner reading is that it is still searching for a workable balance between exports, pricing, and product mix.
Plenty of patents, but limited proof of commercialization
The company describes locking as a technology-, regulation-, and development-heavy activity. It talks about dozens of registered patents and additional pending applications, patented cylinders, smart electromechanical systems, a smart-lock management app launched in 2025 and already installed across major retail, healthcare, and logistics chains, and a new line of smart locks with facial recognition, fingerprints, and digital codes. At the narrative level, this sounds exactly like the segment that should command a margin premium inside the group.
But in 2025 that still is not happening. The technology exists, the launches exist, and the intellectual property exists. What is missing is proof that these elements are generating revenue at a pace and quality that can lift profit. When a segment with a technology pitch is left with ILS 30 thousand of operating profit after a year of launches and high utilization, the right instinct is to be careful about the story before admiring the platform.
The company is already framing digital products and smart products as a core pillar for the coming years, including SaaS-style services and the expansion of smart storage solutions. That may eventually become a real engine. But as of year-end 2025, it is still a promise rather than proven commercialization. The gap is not between having technology and lacking technology. The gap is between technology and economics.
One more point matters here. Part of the segment's value proposition rests on a platform that requires ongoing investment: R&D, compliance with multiple country standards, upgraded production tools, broader inventory, and continued product-line expansion. Those are real barriers to entry, but they also raise the commercialization hurdle. As long as revenue and profit do not catch up with that investment layer, the patent base remains an impressive asset rather than a proven earnings engine.
What has to change from here
The first requirement is a return to growth in external revenue, not just in total segment revenue that can include intra-group sales. That would be the most basic sign that the segment is actually expanding real demand in the market.
The second requirement is that the international channel move from broad presence with thin share into something with clear economic weight. As long as management itself says the overseas share is not material, it is hard to treat exports as the part of the business that will change the earnings structure.
The third requirement is that the smart-product story start to appear in the numbers, not only in launches. If the app, the PEM platform, the smart locks, and the new lines are really opening a new value layer, that should show up in EBITDA rising faster than depreciation and in operating profit becoming a real number again.
The fourth requirement is simpler. The segment has to prove that it knows how to make money at 85% utilization. If even a high activity level cannot generate profit, the problem is no longer temporary. It is structural.
Bottom line
Rav-Bariach's locking segment remains a central yellow flag inside the group thesis. It is presented as a technology-heavy, export-oriented, patent-protected activity, but in 2025 it delivered very little profit after all the investment, all the launches, and all the higher utilization. This is not a collapse in technology. It is a weakness in commercialization.
The good news is that the base exists: a strong domestic brand, an export presence, a meaningful UK customer, a high-utilization plant, and a broad patent portfolio. The less comfortable news is that the economics still are not there. Until the segment shows external growth, a real improvement in EBITDA, and operating profit that does not get absorbed by depreciation, it is hard to treat locking as a profit engine. At the end of 2025, it looks more like a platform with potential than a business that has already earned the narrative built around it.
Disclosure: Deep TASE analyses are general informational, research, and commentary content only. They do not constitute investment advice, investment marketing, a recommendation, or an offer to buy, sell, or hold any security, and are not tailored to any reader's personal circumstances.
The author, site owner, or related parties may hold, buy, sell, or otherwise trade securities or financial instruments related to the companies discussed, before or after publication, without prior notice and without any obligation to update the analysis. Publication of an analysis should not be read as a statement that any position does or does not exist.
The analysis may contain errors, omissions, or information that changes after publication. Readers should review official filings and primary sources before making decisions.