Angel Bakeries Faces Financial Crisis After Factory Fire, Insurance Dispute

Angel Bakeries has significantly increased its damage estimate from a fire that occurred in May at its Kfar Horesh factory, now assessing the total loss at approximately 100 million shekels, a substantial rise from initial estimates in the tens of millions. The insurance company covering the bakery is reportedly refusing to pay out the policy, citing indications that required safety measures were not in place at the time of the fire, as stipulated in the insurance agreement. This dispute has led the parties to enter mediation, with proceedings beginning late last month.

The fire caused severe operational disruptions, drastically reducing the factory's pita production capacity. Output has fallen to about 6,000 pitas per hour, down from a full capacity of 20,000 pitas per hour before the incident. The impact of the production line shutdown and direct damages was evident in Angel's financial reports for the first half of the year.

Despite a slight 1% increase in sales to 296.7 million shekels, driven by domestic market growth and lower flour prices improving gross profit margins to 40.5%, a direct loss of 25.3 million shekels from the fire erased these gains. Consequently, Angel shifted from profitability in the previous year to an operating loss of 11 million shekels, concluding the first half with a net loss of 11.1 million shekels, compared to a net profit of 4.3 million shekels in the same period last year.