Albar in the First Quarter: Utilization Improved, but Credit Growth Shifts the Pressure to Funding
Albar opened 2026 with higher revenue and better fleet utilization, but net profit declined and mortgage-backed credit growth increased its reliance on debt issuance and loan-portfolio sales. The next quarters will be driven less by vehicle sales alone and more by the ability to fund the new credit book without eroding collateral headroom.
Albar reported a first quarter that shows a more productive operating base, but the new growth engine turns 2026 into a funding year rather than a simple vehicle-sales year. Revenue rose 6% to NIS 863 million, average fleet utilization improved from 82% to 86.8%, and a larger active fleet supported leasing and rental revenue. Still, net profit fell to NIS 16 million, because the profitable leasing segment weakened, last year's other income almost disappeared, and the financing activities are already consuming more cash than they release in the quarter. Mortgage-backed lending quickly became a real revenue line, with NIS 22.3 million of quarterly revenue, but the company originated NIS 303.9 million of mortgage-backed loans in the quarter and plans to originate about NIS 1.2 billion over the next year. That means the next read depends on portfolio sales and continued debt access. This is not necessarily a liquidity warning: the company issued debt during the quarter and after the balance-sheet date, kept a stable rating, and has about NIS 746 million of unused approved credit facilities. But collateral buffers in several bond series are close to their ceiling, and part of the collateral value is measured by a price list that excludes several leasing-related discounts, so the report should be read as the start of a funding proof year.
Company Map
Albar is a vehicle-services company with a meaningful financing layer on top. The older base is operating leasing, short-term rental and vehicle trading, which means the business earns both from vehicle usage and from selling vehicles after their operating period. Alongside that base, the group operates consumer vehicle credit and mortgage-backed lending, which became a separately reported segment in the current quarter.
The economic map is simpler than the formal segment map: the vehicle fleet generates activity, collateral and future vehicle sales, while credit creates growth but requires funding sources. The company should therefore not be judged only by revenue or by the number of vehicles. It should be judged by three links: how well the fleet is utilized, how quickly the credit book turns into cash through repayments or portfolio sales, and how much room remains against debt covenants and collateral tests.
The company has a logistics center in Rishon LeZion, about 76 service and sales centers across Israel, and roughly 1,997 employees. From a capital-market perspective, the relevant read is mostly debt and funding, because there is no active ordinary equity trading row. That makes this quarter closer to a credit-platform analysis with a large operating fleet than to a standard vehicle-services earnings read.
Utilization Improved, Profit Did Not Follow at the Same Pace
The positive point in the quarter is that the fleet worked better. Average total fleet was almost unchanged, at 35,194 vehicles versus 35,346 in the prior-year quarter, but average active fleet rose to 30,538 vehicles and utilization improved to 86.8%. The company extracted more activity from essentially the same asset base, not only through fleet expansion.
The problem is that this did not translate into profit at the same pace. Leasing revenue rose to NIS 291.3 million, but leasing segment profit fell to NIS 51.5 million from NIS 67.2 million in the prior-year quarter. Short-term rental improved, with segment profit of NIS 4.9 million versus NIS 2.1 million, and vehicle trading rebounded to NIS 9.3 million from only NIS 0.6 million. This is not broad operational weakness. It is a quarter in which the large core weakened while smaller activities offset only part of the pressure.
The fall in net profit was sharper than the decline in total segment profit because the prior-year quarter included other income of NIS 8.1 million, mainly from revaluing an investment in an investee company, while other income almost disappeared this quarter. Net finance expenses declined to NIS 43.6 million, so financing was not the item that drove the profit fall. The pressure came from operating profit quality and from the absence of that prior-year one-off item.
Mortgages Become Growth, but Cash Pays for It Now
The important shift sits outside the classic vehicle business. The mortgage segment generated NIS 22.3 million of revenue and NIS 2.7 million of segment profit, after the company originated NIS 303.9 million of mortgage-backed loans in the quarter. At the same time, consumer vehicle-credit revenue fell 44% to NIS 13.7 million, mainly after the late-2025 sale of a loan portfolio reduced the managed book.
This is where growth quality matters. Operating cash flow was negative NIS 78.3 million, better than negative NIS 142 million in the prior-year quarter, but still negative. Within cash flow, new loans totaled NIS 399.8 million, loan repayments were NIS 66.8 million, and proceeds from loan-portfolio sales were NIS 55.2 million. The financing activity is already large enough to require a constant cycle of sources, portfolio sales or dedicated funding.
Management assumes that in the first forecast year the company will originate about NIS 1.2 billion of mortgage-backed loans and sell about NIS 650 million of mortgage portfolios. In the second year, origination is again assumed at about NIS 1.2 billion, while portfolio sales are expected to rise to about NIS 1 billion. If mortgage-portfolio sales fall short of those volumes, the company says it will adjust origination to available sources. That sentence matters: mortgage growth is tied directly to access to funding markets, and it can shrink if portfolio sales do not happen at the planned pace.
Regulation is also beginning to add friction. After the balance-sheet date, a circular was published requiring credit providers to present ongoing customer information through a website, and a draft circular was published on the way non-bank credit companies work with customer representatives in housing loans. There is still no quantified cost or growth impact, but for an activity that is being built now, those requirements can raise the operating and control threshold before the segment proves strong profitability.
Debt Is Available, but Collateral and Portfolio Sales Will Set the Next Read
Albar's liquidity cannot be read only through cash. The company ended the quarter with NIS 114.3 million of cash, but current assets of NIS 1.74 billion against current liabilities of NIS 3.64 billion. The working-capital deficit reached about NIS 1.90 billion, compared with about NIS 1.45 billion at the end of 2025 and about NIS 719 million at the end of the prior-year quarter.
A large part of that gap is structural: the vehicle fleet is classified as a non-current asset even though part of it is expected to be sold within a year, and future operating-lease revenue is not recognized as a current asset. But this quarter adds a less routine factor: credit activity, especially mortgages, is also funded through short-term loans while customer credit is longer term. The working-capital deficit is therefore not merely an accounting technicality. It shows the cash cost of entering longer-duration credit.
The company did raise capital. In January, it privately expanded Series 22 bonds and received about NIS 204.5 million of gross proceeds. After the balance-sheet date, it expanded Series 21 and Series 22 bonds and received about NIS 576.2 million of gross proceeds. S&P Maalot affirmed the company's ilA rating with a stable outlook and the ilA+ rating of its senior secured debt. These are important signs that the debt market remains open for the company.
Still, the terms of that access matter. The board reviewed a 24-month forecast that assumes bank, institutional and bond financing of about NIS 2.4 billion in the first year and another NIS 1.3 billion in the second year. This is not a growth plan funded mainly by internal surplus cash flow. It is a plan that continues to require active funding markets.
The collateral table is the yellow flag. In several bond series, debt-to-pledged-vehicle value is close to the 98% ceiling, and in some series the ratio moved sharply between quarter-end and the report publication date.
| Bond series | LTV at March 31, 2026 | LTV near report publication | Ceiling |
|---|---|---|---|
| 17 | 97.5% | 97.1% | 98% |
| 18 | 93.7% | 89.5% | 98% |
| 19 | 96.9% | 88.6% | 98% |
| 20 | 88.5% | 97.8% | 98% |
| 21 | 97.6% | 97.4% | 98% |
| 22 | 97.7% | 90.3% | 98% |
The table does not mean the company is close to a broad default. It is compliant with all undertakings, its equity-to-balance-sheet ratio is 14.5% against lower thresholds, and debt-to-EBITDA under credit agreements is 4.2 versus a 4.8 ceiling. But it does mean bond collateral is not a wide cushion. In addition, the pledged-vehicle value is calculated using the Levi Yitzhak price list without discounts for leasing vehicles, mileage, accidents or other factors, and the company itself notes that there is no certainty that actual sales or enforcement proceeds will match that estimate.
Post-period events clean up several loose ends, but they do not replace the funding thesis. The indirect-import settlements include expected total payments of NIS 37 million that were already provided for in the fourth quarter of 2025, and may release about NIS 24 million of bank guarantees and remove liens if completed. The Noy Sanitation Services sale can return a shareholder loan of about NIS 16.7 million, of which NIS 6 million is cash and the balance is a seller loan. These moves reduce noise and may restore some assets or collateral flexibility, but they do not answer the main question: how quickly new credit turns into recycled funding sources.
The quarter leaves a mixed but clear read: the business direction is not negative, but cash-flow proof is still insufficient. Mortgage-portfolio sales close to plan, continued rating stability and debt-market access, and a recovery in leasing profitability can make the new growth more convincing. Failure to sell credit portfolios, additional pressure on pledged-vehicle values, or higher funding costs would do the opposite. The decline in net profit is therefore not the only story of the quarter: the fleet is working, but the balance sheet must prove it can fund the new growth.
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