Veridis in the First Quarter: New Equity Cut Debt, But Carton and Hadera Still Need Cash
Veridis opened 2026 with positive net profit and lower debt, but the quarter leaned more on real-estate revaluation and new equity than on a clean operating step-up. The next proof points are carton pricing, waste-support stability, the Hadera monetization path, and the ability to fund OPC projects without putting leverage back at the center.
Veridis opened 2026 with a quarter that looks strong at headline level, but it does not yet close the questions left open after 2025. Net profit moved to NIS 71.3 million and debt declined, mainly after a NIS 297.5 million private placement and early repayments of Infinia acquisition debt, but a large part of operating profit came from a NIS 56.5 million fair-value gain on the Hadera investment property. Once the current-quarter revaluation and the prior-year support provision are stripped out, underlying operating profit is very similar in both periods, around NIS 67-70 million. EBITDA of NIS 158.9 million also looks good only until it is compared with prior-year EBITDA of NIS 178.5 million before provisions. The quarter's real value is not a clean return to growth, but a shift in the risk mix: less immediate debt pressure at the company level, more dependence on turning Hadera land, waste supports and carton operations into stable cash. The next few quarters will decide whether the equity raise and refinancing mark a real reduction in risk, or only a bridge period before large projects and open regulation move cash needs back to the center.
Four Layers, Different Earnings Quality
Veridis is a group with several engines that should not be read as one business: waste and regulatory support, the Ashkelon desalination plant, a 20% exposure to OPC Israel, and Infinia, which links carton collection, paper rolls and packaging. Each layer creates value differently. Waste depends on tariffs, licensing and support payments, water generates profit and dividends through VID and Adom, energy comes through equity-accounted profit and cash that may or may not flow from OPC, and carton is an industrial business where export prices and depreciation can erase part of the operating improvement.
The quarter shows that gap clearly. Environmental services reported revenue of NIS 270.5 million and segment profit of NIS 40.3 million, but the comparison with last year is skewed by the support provision recorded then. Water contributed segment profit of NIS 8.0 million and EBITDA of NIS 26.7 million, while the VID dividend slipped slightly to NIS 12.5 million. Energy remained profitable at the segment-profit line, but EBITDA fell to NIS 1.4 million because the comparable quarter included a shareholder-loan repayment from OPC Israel. Carton revenue rose to NIS 318.2 million, yet segment profit fell to NIS 8.8 million. In the other segment, segment profit reached NIS 64.6 million, mainly because of the Hadera revaluation and the exit from white-paper manufacturing.
So the quarter is not a simple "everything improved" report. The improvement exists, but it sits in very different layers of cash accessibility: real-estate revaluation, an industrial business under price pressure, support payments starting to flow again, and lower debt that is heavily tied to new equity.
Profit Came Back, But the Comparison Base Is Misleading
Net profit of NIS 71.3 million versus a NIS 37.3 million loss in the comparable quarter mixes three moves: some improvement in operations and financing costs, the absence of the NIS 60.6 million support provision recorded last year, and a NIS 56.5 million fair-value gain on Hadera investment property, about NIS 43 million after tax. The more useful comparison is operating profit before those two large items. Without the Hadera revaluation, first-quarter operating profit falls from NIS 126.7 million to about NIS 70.2 million. In the comparable quarter, adding back the support provision gives operating profit of about NIS 67.4 million.
| Metric | Q1 2026 | Q1 2025 | Economic Read |
|---|---|---|---|
| Reported operating profit | NIS 126.7m | NIS 6.7m | The headline reflects both revaluation and the absence of the provision |
| Operating profit after adjusting for revaluation and support provision | ~NIS 70.2m | ~NIS 67.4m | Basic improvement, not a dramatic leap |
| Reported EBITDA | NIS 158.9m | NIS 117.8m | Looks strong on a reported basis |
| Prior-quarter EBITDA before provision | NIS 158.9m | NIS 178.5m | The adjusted comparison base is weaker than the headline suggests |
| Dividends, withdrawals and loan repayments from investees | NIS 21.3m | NIS 46.8m | Less cash flowed up from layers above the consolidated operations |
Finance expenses fell to NIS 41.6 million from NIS 50.7 million, a positive change driven by lower financial debt. But anyone looking for proof that 2025 has become a clean recurring profit base should be careful: part of the improvement is accounting or comparative, and the cash layer from OPC and VID was weaker than in the comparable quarter.
Carton, Hadera and OPC Still Need to Become Cash
In the Infinia follow-up analysis, the proof point was clear: the machine 4 conversion has to become profitable capacity, not only additional sales. The first quarter gives a mixed answer. Carton revenue rose slightly to NIS 318.2 million, but segment profit fell to NIS 8.8 million from NIS 27.7 million, and EBITDA fell to NIS 62.0 million from NIS 73.4 million. The company attributes the decline to about NIS 8 million of higher depreciation after the conversion project and to export prices. The approved Infinia grant, about NIS 41 million, can reduce investment cost starting in the second quarter, but it does not prove demand or pricing.
On the balance sheet, the positive move is clearer. Veridis raised NIS 297.5 million net in a private placement, made early repayments of loans taken to acquire Infinia, and reduced net financial debt to NIS 1.61 billion from NIS 1.91 billion at year-end 2025. Including the parent-company loan, net financial debt declined to NIS 1.77 billion from NIS 2.06 billion. Infinia also completed a bank refinancing that removed liens on group assets, extended debt duration and lowered financing costs.
Still, quarterly cash flow does not explain the debt reduction on its own. Operating cash flow of NIS 67.5 million almost exactly covered NIS 49.1 million of capex and NIS 18.0 million of lease-principal repayments. Before debt repayments, capital raises or refinancing moves, there was almost no quarterly surplus. At the same time, after the balance sheet date, a shareholder-loan framework of up to NIS 1.55 billion was approved for OPC Israel to fund equity required for advanced-development projects, mainly Ramat Beka and Hadera 2. Veridis' proportional share may reach up to about NIS 310 million.
Hadera is where accounting value and cash need meet. The fair value of Hadera 2 rose to NIS 325 million and Hadera 1 was valued at NIS 78 million, together with a NIS 56.5 million revaluation gain in the quarter. Uncertainty around lease realization fell from 20% to 10%, and expected realization was moved forward to July 2026. At the same time, Infinia is negotiating with OPC Israel to sell the Hadera rights for expected consideration of about NIS 450 million, but there is no certainty on completion, terms or final consideration. As long as that remains the case, Hadera improves value more than it releases cash.
Conclusions
The first quarter turns 2026 into a bridge year, not a breakout year. On the positive side, there is more equity, lower debt, lower finance expense, 2025 support payments that continued to be received after the balance sheet date, and water that continues to generate through VID. On the other side, carton has already shown that operating improvement does not automatically equal margin improvement, and OPC projects require equity before they release cash to Veridis.
Three items will decide the next few quarters. First, whether carton segment profit recovers, not only revenue. Second, whether support payments, Meshua and the new former-landfill claim move forward without a provision or a tougher regulatory outcome. Third, whether the Hadera rights sale or rental stream becomes binding before the company's OPC funding share weighs on the balance sheet again. Short-interest data also show that the market still wants proof: short interest rose to 2.02% of float on May 15, 2026, and SIR reached 5.51 days, above the sector average of 2.456.
The current read on Veridis is more positive on the balance sheet and more cautious on earnings quality. The equity raise and repayments reduced real debt, while Infinia obtained better financing and an expected investment grant. At the same time, quarterly profit leaned on the Hadera revaluation, EBITDA was below the prior-year pre-provision base, and carton still has to show that new capacity does not become sales at too narrow a margin. If Hadera turns into binding cash and carton returns to higher segment profitability, the balance-sheet improvement will have a broader base. If not, 2026 will remain a year in which the company bought time but still has to prove that cash flow from its major activities can fund the next stage.
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