Angel Bakeries Fire Damage Estimate Soars to $27 Million, Insurance Dispute Looms

Angel Bakeries has revised its damage assessment from a May fire at its Kfar Horesh factory to NIS 100 million (approximately $27 million), a significant increase from initial estimates in the tens of millions of shekels. The company is currently in mediation with its insurer, which has refused to compensate Angel, citing alleged indications that fire safety requirements were not met at the time of the blaze. This dispute has led to a halt in negotiations, with mediation beginning late last month.

The fire severely impacted Angel's production capacity at the Kfar Horesh facility, reducing its output of pita bread to about 6,000 units per hour, down from a potential of 20,000 units per hour before the incident. The disruption not only halted pita production lines but also resulted in substantial financial losses for the company during the first half of the year, leading to an operating and net loss.

Despite the fire's impact, Angel's sales grew by approximately 1% to NIS 296.7 million in the first half of the year. This growth was driven by a 3% increase in sales within Israel, offset by a 13.7% decline in U.S. pita sales, partly due to unfavorable exchange rates. A 5.5% decrease in the price of flour, a key raw material, improved gross profit margins to 40.5% of sales, up from 37.8% in the same period last year.

However, the NIS 25.3 million loss attributed to the Kfar Horesh fire shifted the company from an operating profit to an operating loss of NIS 11 million. Consequently, the net result for the first half of the year turned into a net loss of NIS 11.1 million, compared to a net profit of NIS 4.3 million in the first half of 2023.