The Stronger Shekel In 2025: Who Really Benefits, Who Loses The Benefit, And Who Gets Hurt
A stronger shekel in 2025 does not help every company that buys in foreign currency. This review examines 22 companies after a broad read of FY2025 annual reports, and sorts them into three groups: businesses already showing gross-margin relief, businesses losing part of the benefit to hedging and inventory timing, and businesses that are actually hurt because their revenue is linked to foreign currency.
The Bottom Line
The main mistake in the shekel-strengthening debate is to talk about "importers" as if they were one category. Across a broad read of 573 FY2025 annual reports, 512 companies mentioned foreign exchange, exchange rates, the dollar, the euro, or hedging. In practice, only 22 had enough operating-language in the filings to support a sharp conclusion. That is the core point: not every company that buys in foreign currency benefits, and not every company that benefits gets to keep that benefit in profit.
The right reading of 2025 breaks the names into three groups. The first group already shows gross-margin support from the stronger shekel. The second group has positive direction, but the benefit is partly lost to hedging, inventory rollover, or competition. The third group is actually hurt by the move because revenue is foreign-currency linked or because reported sales and inventory values erode when the shekel strengthens.
How To Read The Thesis
Shekel appreciation in 2025 was large enough to change business economics. In several filings, the average USD/ILS rate fell from 3.699 in 2024 to about 3.453 in 2025, while the year-end rate fell from 3.647 to 3.190. The euro moved less sharply, but in the same direction. That is meaningful. It just does not flow through evenly.
To decide whether a company truly benefits from the stronger shekel, four tests matter:
| Test | What to ask | Why it matters |
|---|---|---|
| Purchase currency vs selling currency | Does the company buy in dollars or euros and sell mainly in shekels | Without a real currency mismatch, there is no earnings engine |
| Inventory cycle | How long does it take for cheaper inventory to reach cost of sales | Even the right direction can be delayed by one or two quarters |
| Hedging | Does the company lock exposure through forwards, options, or advance contracts | The benefit can move from gross profit into the finance line |
| Inverse exposure | Is revenue itself foreign-currency linked or translated into shekels | In that case, a stronger shekel may erase revenue and profitability |
That filter changes the picture. Instead of an "importer map", the result is a map of business mechanisms. Some businesses benefit directly. Some benefit later. Some only appear to benefit at first glance while actually landing on the wrong side of the move.
Who Already Shows The Benefit In FY2025
The strongest group right now is the one where management itself already ties shekel appreciation to gross-margin improvement, rather than just describing theoretical exposure.
| Company | What the filing says | Business reading |
|---|---|---|
| DELTA BRANDS | Gross-margin improvement came mainly from shekel appreciation, net of hedges and lower freight | One of the cleanest cases because management already netted hedging into the explanation |
| URBANICA(PALO) | The company buys in dollars, and a stronger shekel has a positive effect on gross profitability | A clear imported-merchandise retail model |
| SUNY COMMUN | A lower dollar increased gross profit, but also increased FX differences in finance | The benefit is real, but the accounting path splits it between gross profit and finance |
DELTA BRANDS is currently the clearest lead case. The company does not just show imported-product exposure. It explicitly says gross-margin improvement came mainly from shekel appreciation, net of hedge contracts and lower freight costs. That matters because the reader does not need to guess whether the effect is operational or merely accounting noise.
URBANICA(PALO) presents a more direct case. Products are bought in dollars, and the filing says directly that a stronger shekel supports gross profitability. The main risk here is not FX. It is retail behavior. If the company decides to hand the benefit back to customers through promotions or markdowns, the margin expansion will be softer than the currency move suggests.
SUNY COMMUN is especially valuable because it shows the gap between economics and reported presentation. Purchases from Samsung are dollar-denominated while selling prices in Israel are mostly in shekels, so a weaker dollar genuinely helps gross profit. At the same time, the company manages the exposure with advance contracts, and part of the effect therefore shows up in the finance line. This is exactly the kind of case where the market can misread the next quarter if it looks only at net profit.
Where The Benefit Exists, But Does Not Fully Stay In The Business
This is the largest and most interesting group. The positive direction exists, but the benefit is cut on the way by inventory timing, hedging, competition, or pricing formulas linked to the dollar.
| Company | Why it belongs in the thesis | What delays or erodes the benefit |
|---|---|---|
| BUBBLES | About 70% of purchases are affected by the dollar, and the company now expects lower cost of sales and better gross profit in 2026 | This is still a forward expectation, not a fully realized FY2025 proof point |
| BRILL | The weaker dollar created mark-to-market losses on hedge contracts and FX balances | Management explicitly says the accounting loss does not reflect the future gross-profit effect |
| RALCO | Purchases are dollar-denominated while sales are in shekels | Hedge losses and finance noise absorbed part of the 2025 effect |
| BRIMAG DIGITAL | Imported products in foreign currency and sales in shekels | Long inventory cycle and hedging delay the benefit |
| ICON GROUP | Most products are bought in dollars | In the distribution segment, most selling prices are set by the dollar rate at the sale date |
| CASTRO | Merchandise is sourced mainly in dollars from overseas suppliers | The benefit is offset by discounting, promotions, and retail pressure |
| TADIRAN GROUP | Inventory is largely purchased from foreign suppliers | A formal hedge policy makes direction clear, but timing less clean |
| DIPLOMAT HOLDI. | Most sales are in shekels | Only part of purchases are dollar-linked, and a large share is already in NIS or EUR |
| SANO | Lower input costs helped in the second half of 2025 | This is more of an input-cost story than a pure imported-merchandise story |
| PARKOMAT INT. | Production inputs and components are exposed mainly to the euro and foreign sourcing | The annual frames the benefit mostly as forward-looking rather than fully realized in 2025 |
BUBBLES is a good example of why the distinction between 2025 and 2026 matters. The company does not claim that shekel appreciation already improved FY2025. It says explicitly that roughly 70% of purchases are affected by the dollar and therefore expects lower cost of sales and better gross profit in 2026. That is a strong statement, but it belongs to the next validation window, not to the FY2025 result itself.
BRILL gives perhaps the best example of a business benefit that still looks messy in the first set of reported numbers. The company used hedge contracts for future merchandise purchases. When the dollar fell in 2025, it recorded mark-to-market losses on existing hedge positions and FX balances. Management also says explicitly that this loss does not reflect the future gross-profit effect that may emerge from the lower dollar. In other words, a reader focused only on the bottom line can miss that the business economics may actually have improved.
RALCO and BRIMAG DIGITAL sit in the same area. In both, the cost engine is clear: buying in dollars or foreign currency and selling in shekels. But in both, inventory and hedging complicate the timing. BRIMAG is especially interesting because the inventory cycle can delay the point at which the cheaper currency reaches cost of sales. The market often rushes to price "a weaker dollar" long before the cheaper inventory has actually rotated through the P&L.
ICON GROUP is less straightforward than it looks at first glance. On one hand, the group buys most products in dollars. On the other hand, in the distribution segment most selling prices are set by the dollar rate at the date of sale. That means the business model does not keep all of the shekel benefit. In part of the activity, the currency simply moves through the pricing formula. Still, the company also carries inventory, dollar supplier liabilities, and hedge contracts, so it belongs in the thesis, just not in the cleanest beneficiary ring.
CASTRO, TADIRAN GROUP, and DIPLOMAT HOLDI. show why it is not enough to know who imports. CASTRO did get help from a stronger shekel, but only as an offset inside a broader margin story shaped by discounting, same-store weakness, and retail competition. TADIRAN GROUP looks relevant because much of its inventory is bought from overseas suppliers, but the group also hedges a significant share of the exposure, so it is difficult to argue for a straight pass-through into bottom-line profit. At DIPLOMAT, the model is even less pure: in Israel around 65% of purchases are already in NIS, around 24% in EUR, and only around 10% in USD. That is real FX exposure, but not a simple "dollar gift" story.
SANO and PARKOMAT INT. need careful framing. At SANO, the second half of 2025 already showed margin improvement from lower raw-material and product costs, even though other segments still dealt with cost pressure. At PARKOMAT INT., the direction is positive, especially if the shekel keeps strengthening against the euro, but the language in the annual is more forward-looking than fully realized. Both are relevant. Neither is a clean headline proof case yet.
Who Is Actually Hurt By Shekel Appreciation
This is the most important correction to the simplistic thesis. In several companies, a stronger shekel works in exactly the opposite direction. Sometimes because revenue itself is dollar- or euro-linked. Sometimes because the reported shekel value of sales, pricing, or inventory erodes when the local currency strengthens.
| Company | What the filing says in practice | Business reading |
|---|---|---|
| ACCEL | Negative shekel effect estimated at about NIS 26 million on revenue and about NIS 6 million on operating profit | One of the clearest quantified cases |
| ILEX MEDICAL | FY2025 results were materially affected by a weaker dollar, partly offset by derivatives | Foreign-currency revenue matters more than any input relief |
| STG | Most revenue is FX-linked or received in FX, while most operating expenses are shekel-based | Almost the mirror image of an importer-beneficiary case |
| ELSPEC | Sharp declines in the dollar and euro hurt reported revenue and profitability in NIS | A classic global-company translation and operating headwind |
| SCOPE | Shekel appreciation significantly moderated sales growth | The company also updates shekel prices when the dollar falls |
| ARAN | A stronger shekel against the dollar erodes revenue and gross profit | Direct and unambiguous wording |
| DSIT | Revenue is largely foreign-currency based, while much of the cost base is in shekels | A stronger shekel compresses profitability unless hedging fully offsets it |
| SPUNTECH | About NIS 12.6 million hit to gross profit due to shekel appreciation against the dollar and euro | A strong quantified example of direct damage |
| NISSAN | Shekel appreciation hurt gross profit, operating profit, and other profit | Another case where the move erodes reported inventory value and results |
ACCEL is probably the sharpest example. The company says explicitly that the negative effect of shekel appreciation in 2025 is estimated at roughly NIS 26 million on revenue and NIS 6 million on operating profit. That is not a footnote on FX sensitivity. It is a direct admission that what looks like a tailwind elsewhere acts here as a headwind.
ILEX MEDICAL, STG, and DSIT illustrate the same point from different angles. At ILEX MEDICAL, dollar weakness hurt results, even if derivative activity softened part of the move. At STG, the annual almost writes the opposite thesis directly: revenue is largely FX-linked while operating expenses are mostly shekel-based, so a stronger shekel directly hurts results. At DSIT, the structure is similar, with foreign-currency revenue against an Israeli cost base.
SCOPE matters because it shows that not every inventory-heavy business benefits automatically. The company says shekel appreciation significantly moderated sales growth. It also updates shekel pricing in line with dollar changes. So when the dollar falls, the benefit does not remain entirely inside the margin. Part of it is passed forward into price.
SPUNTECH and NISSAN provide the hard proof that the damage can be meaningful. At SPUNTECH, the filing quantifies about NIS 12.6 million of gross-profit damage from shekel appreciation against the dollar and euro. At NISSAN, management says shekel appreciation hurt gross profit, operating profit, and other profit, while the erosion in inventory value during the year reached around NIS 13 million. That is no longer a theoretical sensitivity issue.
What About The Names Left Outside The Core
There is also a group where FX clearly matters, but the business picture is too mixed to make those companies lead test cases. Rav-Bariach(08) is exposed through imported raw materials, but the FY2025 language does not tie shekel appreciation to reported results as sharply as DELTA BRANDS or SUNY COMMUN do. KERUR, TEMPO, and SUPERGAS POWER are relevant to the theme, but there the story already mixes FX, commodities, energy costs, and segment-level effects. SHNAP and GINEGAR sit in a similar zone where currency, manufacturing, mix, and supply chains all interact.
That does not put them outside the map. It simply means they are less useful as anchors for one narrow question: which businesses truly keep the shekel-appreciation benefit in profit.
What To Watch In The 2026 Quarters
The key question is no longer what happened to the shekel in 2025. That part is known. The real question is how it flows into 2026 reporting. Five checkpoints matter:
- gross-margin improvement before looking at finance
- lower or stable inventory days, suggesting that older inventory has already rolled out
- smaller hedge-mark losses, or at least a clearer explanation that the benefit sits in gross profit
- stable customer pricing, without full give-back through promotions
- in the inverse-exposure group, explicit signs that revenue, pricing, or inventory values continue to erode under a strong shekel
The businesses that handle this correctly may start to look stronger as early as Q1 or Q2 2026. The rest will be left with a nice story about a weaker dollar and very little real change in the bottom line.
Conclusions
The business reading of 2025 is now much clearer. If the question is who already shows the benefit, the strongest names are DELTA BRANDS, URBANICA(PALO), and SUNY COMMUN. If the question is who may benefit, but only after hedging, inventory, and pricing stop absorbing the effect, the focus should be on BUBBLES, BRILL, RALCO, BRIMAG DIGITAL, ICON GROUP, TADIRAN GROUP, DIPLOMAT HOLDI., SANO, and PARKOMAT INT. And if the question is who is actually hurt when the shekel strengthens, the list includes ACCEL, ILEX MEDICAL, STG, ELSPEC, SCOPE, ARAN, DSIT, SPUNTECH, and NISSAN.
This is no longer an "importer universe" map. It is a map of business models. Shekel appreciation helps only when there is a real mismatch between purchase and selling currency, when inventory turns quickly enough, when hedge contracts do not absorb the whole effect, and when the company does not hand the benefit back to the market. The evidence base is FY2025. The real validation window is Q1-Q2 2026.