Electra Consumer Products in the First Quarter: Carrefour Is Growing, but Working Capital Still Absorbs Cash

Electra Consumer Products opened 2026 with a quarter that strengthens both sides of the story at the same time: retail operations are working better, but they still consume substantial capital on the way. Electrical retail grew at a double-digit rate and improved profitability, Carrefour increased revenue, same-store sales and EBITDA excluding IFRS 16, and Global Retail has already completed a NIS 100 million capital raise. Still, net profit attributable to shareholders rose mainly because the comparable quarter included a discontinued operation that lost money, while profit from continuing operations declined. Operating cash flow fell to only NIS 44 million, net financial debt excluding IFRS 16 rose to NIS 965 million, and Carrefour remains the main source of working-capital pressure, debt and possible additional support. The quarter therefore does not close the issue raised in the prior annual analysis. It sharpens it: the operating improvement is visible, but shareholder value still depends on a visible decline in debt, a steadier working-capital profile and proof that Carrefour's growth tenders do not come at the expense of cash. In the next reports, the market is likely to focus less on the growth headline and more on whether Global Retail can fund itself without another support round.

Company Overview

Electra Consumer Products is a consumer and retail group with five reported engines: electrical consumer products, electrical retail, food retail under Carrefour, sports and leisure, and investment real estate. In practice, today's economics look less like a classic electrical-products importer and more like a retail group with leases, inventory, supplier credit, bank debt and a large food business that is still being repaired.

The first-quarter map is straightforward: electrical retail is currently the highest-quality profit engine, Carrefour is the growth engine that still needs capital, sports and leisure was hit by temporary store closures, and electrical consumer products suffered from weaker installations and deliveries in air-conditioning projects. The Rishon LeZion real estate remains an important value-creation option, but it contributed very little profit in the quarter, unlike the comparable quarter, when investment-property revaluation added NIS 30 million to other income.

The sector risk is not the mere existence of inventory or negative working capital. In food and electrical retail, that is part of the model. The warning flag is different: when the same negative working capital sits inside a business still being repaired, with renewed credit lines, a completed capital raise and a store-disposal plan, the right question is whether growth is already funding itself or merely delaying the need for more financing.

Reported Profit Is Weaker Than the Headline Suggests

The headline figures look comfortable: revenue rose 6.2% to NIS 1.866 billion, EBITDA excluding IFRS 16 rose to NIS 102 million, and net profit rose to NIS 34 million. But the quality of the increase in net profit is limited. The comparable quarter included a NIS 34 million loss from discontinued operations, mainly around the reduction of heat-pump production lines. Without that, profit from continuing operations fell from NIS 59 million to NIS 34 million, and net profit attributable to shareholders from continuing operations fell from NIS 55 million to NIS 26 million.

The gap also appears below the bottom line. Operating profit before other income rose only from NIS 94 million to NIS 96 million, and the margin fell from 5.4% to 5.2% of revenue. The comparable quarter included NIS 41 million of other income, mainly real-estate revaluation and profit from food-segment store disposals. The current quarter included only NIS 3 million of other income. Reported operating profit therefore fell from NIS 135 million to NIS 99 million, even though parts of the retail activity improved.

Carrefour Is Improving, but Has Not Released the Group From the Need for Capital

Carrefour is showing real operating progress. Food retail revenue rose 7.6% to NIS 860 million, same-store sales in fully operating stores rose 2.4%, and EBITDA excluding IFRS 16 increased from NIS 31 million to NIS 38 million. Global Retail itself, excluding purchase-price allocation adjustments and segment adjustments, recorded operating profit before other income of about NIS 40 million and net profit of about NIS 6 million, compared with about NIS 35 million and NIS 5.3 million in the comparable quarter.

The same quarter also shows why the previous Carrefour-focused analysis still matters. Food segment profit remained NIS 42 million, because the improvement before other income was offset by lower other income. The food segment's operating working-capital deficit was NIS 551 million, compared with NIS 486 million at the end of the comparable quarter and NIS 570 million at the end of 2025. At group level, the working-capital deficit was NIS 1.526 billion, which the company attributes mainly to Global Retail.

The events around Carrefour are more important than the sales headline. Global Retail completed a NIS 100 million capital raise from all its shareholders, with proceeds intended mainly for repayment of bank debt, rescheduling the remaining bank debt and reducing interest costs. It is also working to raise additional capital from an external investor, if possible, within 12 months. It signed an agreement to sell nine stores for total consideration of about NIS 50 million, but after the balance-sheet date the conditions precedent were completed only for two stores that were handed over to the buyer.

The economic implication is clear. Carrefour no longer looks like an operation that cannot generate operating profit, but it has not yet shown that it can grow without burdening the balance sheet. The "Israel's Cheap Basket" tender can bring traffic and sales in 52 stores, and the food-supply agreement for about 200 defense-force lounges is expected to begin in the third quarter with an estimated annual scope of about NIS 35 million. Those are positive triggers, but the key question is how much of those sales remains after basket prices, inventory, suppliers, credit and financing.

Electrical Retail Holds the Quarter, While Air Conditioning and Sports Still Need Repair

Electrical retail made the clearest contribution. Revenue rose 10.7% to NIS 669 million, same-store sales rose 5.3%, and excluding duty-free stores that were closed during the February security operation, same-store sales rose 11.2%. Segment profit increased from NIS 27 million to NIS 33 million, and the segment profit margin rose from 4.4% to 5.0%.

Against that, electrical consumer products remind investors that the quarter was also affected by timing and an external event. Segment revenue fell 5.3% to NIS 233 million, and segment profit declined from NIS 25 million to NIS 16 million. The pressure came mainly from air conditioning, following lower installations and deliveries to residential projects during the security operation. The company notes an increase in the project-order backlog in air conditioning, and the presentation highlights growth in backlog signed during the quarter as a result of the Samsung agreement. That leaves room for improvement later in the year, but for now it is future visibility, not profit already recognized.

In sports and leisure the picture is similar: revenue was almost unchanged, NIS 135 million versus NIS 134 million, but segment profit fell from NIS 18 million to NIS 14 million. Same-store sales fell 3.4%, and excluding days when stores were closed during the operation, they rose 1.7%. Part of the weakness is therefore temporary, but even after the adjustment it is not a jump large enough to change the group's profile.

Cash Flow and the Next Quarters

The gap between profit and cash is where the quarter becomes less comfortable. Operating cash flow was only NIS 44 million, compared with NIS 101 million in the comparable quarter. The decline mainly came from working capital: inventory rose by NIS 143 million, trade receivables and other receivables rose together by NIS 44 million, and suppliers rose by NIS 108 million. Some of this is seasonal, but that is exactly the cost of growth in an inventory-heavy retailer.

The cash discussion needs a clear distinction between ongoing operating cash generation and cash flexibility after all actual uses. In the quarter itself the company generated NIS 44 million from operations, but used NIS 39 million for investing activity, repaid NIS 62 million of lease liabilities, repaid NIS 25 million of long-term loans, bought back NIS 18 million of shares and paid NIS 11 million of dividends to non-controlling interests. The gap was balanced by a NIS 51 million equity issuance to non-controlling interests and NIS 70 million of net short-term credit. In addition, a NIS 40 million dividend to the company's shareholders was declared in the quarter and paid in April.

Net financial debt excluding IFRS 16 rose from NIS 929 million at the end of 2025 to NIS 965 million at the end of March. In the food segment it actually declined from NIS 471 million to NIS 345 million excluding IFRS 16, alongside Global Retail's capital raise and financing actions, but the group as a whole has not yet shown a debt decline. The covenants with bondholders are very comfortable: standalone tangible equity of NIS 624 million versus a minimum requirement of NIS 350 million, and net financial debt to net balance sheet of 12.62% versus a 67% ceiling. The issue is therefore not covenant proximity, but the ability to translate operating improvement into actual deleveraging.

The first quarter is not weak. It proves that the group's retail operations can grow even in a disrupted environment, and that Carrefour is already producing positive operating profit before other income. But it also shows that this improvement still sits on top of a heavy layer of working capital, leases, short-term credit and shareholder support at Global Retail.

The first proof point is Carrefour. If the cheap-basket tender, food supply to the defense forces, store disposals and franchising moves lift sales without expanding the working-capital deficit again, the interpretation of the quarter will improve. If growth requires more credit, more support or more asset sales, the market will treat the quarter as another stage in an expensive recovery. The second proof point is group cash flow: without better cash flow after inventory, investments, leases and dividends, net debt excluding IFRS 16 will not decline.

The third proof point is real estate. The March 2026 agreement to promote a new plan for the Rishon LeZion complex, including an option to sell up to 28% of the land at a valuation at least 10% above book value, could make part of the real-estate value more accessible. At this stage it is still contingent on the plan, its effectiveness and additional conditions. It is not immediate cash.

The current conclusion is that the first quarter of 2026 strengthens the operating improvement but does not close the balance-sheet question. The company looks better in stores, mainly in electrical retail and Carrefour, but investors still need to see lower net debt excluding IFRS 16, a recovery in operating cash flow, and Global Retail working capital that no longer dictates the story. The strongest counter-thesis is that the hardest part is already behind the company: the capital raise was completed, credit lines were renewed, the store disposal process has started, and retail operations are improving. For that view to become more convincing, the next quarters need to show that the improvement reaches the cash account, not only operating profit.