Ginegar in the First Quarter: Cash Flow Improved, but India and Italy Still Consume Cash
Ginegar opened 2026 with better profitability, positive operating cash flow and progress at Agriplast. But cash fell by NIS 27.6 million because the quarter already funded India, the Italy expansion and debt repayment.
Ginegar opened 2026 with real improvement in the place where 2025 was weak: gross margin rose, the agricultural segment returned to positive segment profit, and operating cash flow moved to NIS 7.4 million after a year of negative cash flow. But this is not a full reset yet, because the cash generated by operations was absorbed almost immediately by the Agriplast investment, capital expenditure and debt repayment, leaving cash at NIS 56.7 million. Sales looked flat in shekel terms, but behind that number were 12% growth in kilograms sold and 22% growth in square meters, offset by a currency hit of NIS 10.5 million to sales and NIS 2.1 million to EBITDA, the profit-before-depreciation measure also used by the company’s lenders. The quarter therefore does not tell a simple story of stagnation. It shows a company selling more, improving margins, and still failing to keep cash on the balance sheet. The India move advanced as most Agriplast shares were transferred to the Indian subsidiary, but the transaction has not yet been completed and the cash has already gone out. The next quarters need to show that the operating improvement is not only a seasonal release of working capital, but the beginning of a business that funds its expansion instead of leaning again on short-term credit.
Company Setup
Ginegar manufactures polyethylene films and nets for agriculture and technical applications, with production sites in Israel, Brazil and Italy, and distribution sites in Israel, the United States, Spain and India. Economically, this is not just a plastics manufacturer with a revenue line. It is a company whose earnings depend on three sensitive levers: raw-material and freight costs, the mix between agriculture and technical films, and management of a heavy working-capital base made of inventory, customers and suppliers.
The split between the two segments matters more than consolidated sales. Agriculture accounted for 65% of first-quarter sales, but technical films, only 35% of sales, still generated about 71% of segment results. That continues the main point from the previous annual analysis: agriculture is the revenue center, but technical films remain the profit anchor.
The market is looking at a relatively small company, with a market value of roughly NIS 97 million, equity of NIS 190.8 million, and short-term bank credit of NIS 114.5 million. The practical question is therefore not only whether sales grow. It is whether every shekel of sales leaves enough profit and cash to finance inventory, customer credit, investments in Italy and increased control in India.
Agriculture Recovered, but Technical Films Still Carry the Result
The first quarter closed part of the 2025 weakness in the most important place: agriculture. Agricultural sales declined to NIS 92.1 million from NIS 95.3 million in the comparable quarter, but segment results moved from a NIS 2.4 million loss to a NIS 3.3 million profit. This is not revenue growth. It is better quality of profit. Gross profit in agriculture rose to NIS 13.4 million from NIS 10.0 million despite lower revenue.
Technical films remained the steadier business. Sales rose to NIS 50.4 million from NIS 47.6 million, and segment results stayed around NIS 8.0 million. That is a strength, but it is also profit concentration: even after agriculture recovered, most segment profit still came from the smaller revenue base. If Flextech and the technical segment lose margin, agriculture has not yet proved that it can carry the group at the same quality of earnings.
The reason consolidated sales looked almost unchanged was currency. The company sold more volume, but shekel strengthening against the dollar and euro reduced reported sales by about NIS 10.5 million and EBITDA by NIS 2.1 million. Without that hit, the quarter would have looked stronger on the top line. Currency is not a complete explanation, though. North America sales fell to NIS 22.2 million from NIS 34.8 million, and rest-of-world sales fell to NIS 40.6 million from NIS 60.9 million. Western Europe and Israel offset the decline, but the geographic mix was highly volatile.
Cash Flow Improved, but Cash Did Not Stay on the Balance Sheet
The important point in the quarter is the return to positive operating cash flow. Operating cash flow was NIS 7.4 million, compared with negative NIS 4.7 million in the comparable quarter and negative NIS 17.4 million for all of 2025. The improvement mainly came from a NIS 5.4 million decline in customers and a NIS 10.2 million decline in inventory. This is exactly where the company needed to show progress after 2025.
Still, when the quarter is tested through all-in cash flexibility after actual cash uses, the picture is less comfortable. Positive operating cash flow was not enough against NIS 18.9 million used in investing activities, NIS 14.9 million used in financing activities, and NIS 1.2 million of currency translation effects. Cash therefore declined from NIS 84.3 million at the beginning of the year to NIS 56.7 million at the end of March.
Working capital improved only partly. Inventory declined to NIS 157.8 million and customers declined to NIS 179.4 million, but suppliers also fell to NIS 115.8 million. Average supplier days fell to 106 from 137 in the comparable quarter, while customer days rose to 104 from 99. In other words, the company released inventory and collected cash in the quarter, but it benefited less from supplier credit than it did a year earlier. That is why the cash improvement is still fragile.
The funding structure has also not returned to a comfortable position. Short-term bank credit at the end of March declined to NIS 114.5 million from NIS 121.6 million at the end of 2025, but average short-term loans during the quarter were NIS 118.1 million, compared with only NIS 32.8 million in the comparable quarter. The company’s explanation remains similar: it did not raise additional long-term credit as an alternative to long-term loans that were repaid, and preferred short-term financing in expectation of lower rates. That gives some flexibility, but keeps the company highly dependent on bank decisions and changing terms.
India, Italy and Input Costs Will Decide Whether the Improvement Holds
The India move advanced, but it is not closed. In April 2026, most Agriplast shares due to Ginegar India under the increased-holding agreement were transferred, but the transaction has not been completed. During the quarter, about NIS 11.2 million had already been paid for additional shares in an associate and turning it into a subsidiary. India is therefore already consuming cash before its contribution stabilizes in the consolidated results.
Italy has a similar timing issue. Property, plant and equipment included about NIS 9 million of advances for machines ordered for the production site in Italy. The investor presentation sharpens why Flextech matters: it serves advanced technical applications, so investment in the Italian site should be tested through its contribution to technical-segment sales and profitability. The current quarter still shows the investment side more clearly than the contribution. The proof will arrive when added capacity supports sales and profitability without adding more balance-sheet pressure.
The immediate risk comes from costs. After the balance-sheet date, the company described sharp increases in raw-material prices, reduced polymer supply, higher sea-freight costs, and expected energy-cost inflation. It is updating prices, reviewing orders, and sometimes limiting them until commercial terms become clearer. That protects margins, but may slow sales timing or add customer friction.
The first quarter improves the read on Ginegar, but does not complete it. Agriculture showed a profitable recovery, technical films remained the anchor, and operating cash flow returned to positive territory. Against that, cash declined, India and Italy are already consuming capital, and short-term credit remains much higher than in the comparable quarter. The next proofs are clear: preserve margins during input-cost inflation, complete Agriplast without another leverage jump, and keep operating cash flow positive after the initial inventory release.
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