Baladi: Internal Efficiency Engine or External Logistics Growth Story
Baladi's logistics segment swung from a NIS 22.2 million operating loss in 2024 to a NIS 19.0 million profit in 2025, but only NIS 5.5 million of the segment's NIS 98.4 million revenue came from outside customers. This follow-up separates the internal efficiency proof that is already real from the external growth story that remains small and order-driven.
The Profit Swing Is Real, But The Proof Is Still Mostly Internal
The main article already flagged logistics as one of the sharpest lines in Baladi's 2025 report. This follow-up isolates a narrower question: did 2025 already prove an external logistics business, or did it mainly prove that the hub is finally working for Baladi itself.
The report gives a cleaner answer than the headline number suggests. The logistics segment swung from a NIS 22.2 million operating loss in 2024 to a NIS 19.0 million operating profit in 2025, but external revenue was only NIS 5.5 million. In the same year, the segment recorded NIS 92.9 million of intersegment revenue. In other words, more than 94% of logistics-segment revenue still came from inside the group.
That is the number that organizes the whole discussion. Anyone reading the profit swing as proof that Baladi already has a scaled third-party logistics franchise is reading too much into the report. Anyone dismissing intersegment revenue as if it creates no value is missing the real operational shift. The hub is already creating value, but at this stage the proven value is first and foremost internal.
| Year | External revenue | Intersegment revenue | External share of segment revenue | Segment result | What it actually means |
|---|---|---|---|---|---|
| 2023 | 0 | NIS 13.8m | 0% | Loss of NIS 21.2m | The hub had not yet proven itself either externally or internally |
| 2024 | NIS 1.0m | NIS 17.7m | 5.3% | Loss of NIS 22.2m | First external revenue appeared, but still no profit base |
| 2025 | NIS 5.5m | NIS 92.9m | 5.6% | Profit of NIS 19.0m | The real proof is far broader internal use, not a step-change in outside business |
The bridge from 2024 to 2025 leaves very little room for a different reading. Segment revenue grew by roughly NIS 79.7 million. Only about NIS 4.5 million of that came from external revenue, while about NIS 75.2 million came from intersegment revenue. At the same time, segment profit improved by NIS 41.2 million. The numbers themselves say the swing was not built mainly on outside scale.
What The Outside Customer Actually Proves, And What It Still Does Not
The company does deserve precise credit here. Baladi has shown that there is a real outside customer for the logistics hub. In November 2024 the company signed an agreement with an institutional customer for storage and distribution services, and during 2025 it received additional notices exercising options to extend that engagement. The agreement also allows the customer to increase order volume by up to 50% without changing the commercial terms.
But the report is explicit about the other side of the same story. The consideration from the contract is described as not material to the company. The extensions are subject to the pace of order-budget utilization and to updated orders received from time to time. At the reporting date only a non-material part of the logistics hub was being used for those services. The company also says that other logistics services provided to external customers during 2025 were not material.
That distinction matters. There is product-market proof, but not yet platform proof. One institutional customer, renewed through option notices and still dependent on order flow and budget utilization, is not yet a broad customer book, not yet a material revenue layer, and not yet proof that Baladi has already built a meaningful outside logistics business.
So this is real commercial progress, but it is still an early-stage form of proof. The report does not show a diversified customer base, does not show material outside revenue, and does not show a clear move from use-case validation to scaled third-party demand.
Where The Value Is Already Real
This is where the opposite analytical mistake needs to be avoided. The fact that most of logistics-segment revenue is intersegment does not make the segment profit unreal. The opposite is closer to the truth. Section 4.2.2 says the segment's first operating profit in 2025 came mostly from services provided to the group's food segments, alongside revenue from one institutional customer throughout the reporting period. That is exactly what it looks like when a heavy logistics asset moves from being a burden to becoming operating infrastructure that absorbs internal throughput, removes friction, and can carry itself.
Note 28 points the same way. In 2025 the segment generated NIS 98.4 million of revenue versus only NIS 18.7 million in 2024. But nearly all of that jump ran through internal charging for storage, cooling, picking, and distribution services for the food segments. So the right way to read the hub today is two-layered:
- As an internal value layer: already proven.
- As an external growth layer: still mostly an option.
The sharpest way to see that is the gap between segment profit and outside revenue. In 2025 the segment generated NIS 19.0 million of operating profit, while external revenue was only NIS 5.5 million. So the profit line cannot be read as if it were already produced by a mature third-party logistics franchise. At the same time, it cannot be dismissed as mere presentation, because the report itself shows far broader internal use of the infrastructure Baladi built.
How The Logistics Hub Should Be Read Today
The balanced reading is also the stricter one. As of year-end 2025, Baladi's logistics hub is mainly an internal efficiency engine with a first outside-customer proof point, not yet a proven external growth engine. That does not diminish the achievement. It places it correctly.
If the market wants to give the hub credit today, that credit should sit on three things:
- proof that the asset is no longer a passive cost center but an operating layer that generates profit inside Baladi's platform,
- proof that there is at least initial outside demand for storage and distribution services,
- proof that the existing outside customer renewed the relationship into 2025.
But what is still unproven matters just as much:
- external revenue is still very small relative to total logistics-segment revenue,
- the mix barely changed between 2024 and 2025 because the external share stayed around 5% to 6%,
- the disclosed outside contract remains dependent on actual orders and budget, rather than looking like a broad commercial anchor.
That is what drives the interpretation. Anyone who wants to treat the hub as a fully-fledged TPL business already needs something the report does not yet provide: materially larger outside revenue, a broader customer book, or at least a clear shift from proof of use to proof of scale. Those elements are still missing. What the report does provide is proof that the hub is beginning to improve group economics from the inside.
Conclusion
2025 did not prove that Baladi has already built a meaningful external logistics growth business. It did prove something else, and in some ways something more fundamental: the logistics hub is now generating real operating value inside Baladi. The move from a NIS 22.2 million loss to a NIS 19.0 million profit is sharp, but it was built mainly on much broader internal use, not on a dramatic jump in outside business.
The continuation thesis is straightforward: as of year-end 2025, Baladi's logistics hub should be read first as an internal efficiency engine that already works, and only second as an external growth option that still needs scale proof. If upcoming filings start to show outside logistics revenue becoming material and the commercial base broadening beyond one institutional customer, that reading can change. Until then, the value is already there, but it still sits mainly inside the group.
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