Tomer Food's Financials Reveal Weakened Profitability and Past Accounting Issues
Translated & summarized from Bizportal by baba
Tomer Food's latest financial reports reveal a significant drop in profitability and substantial revisions to its 2025 earnings, reducing net profit from 3.06 million to 67,000 shekels. These changes stemmed from an investigation into inventory accounting practices, triggered by a CFO appointee's resignation. The company also reported a net loss of 21.3 million shekels in its first-half 2026 results, largely due to a one-time merger-related expense. The revised figures may have prevented its May 2026 stock market entry due to unmet EBITDA conditions.
The story in 6 lines · by baba
- Tomer Food's 2025 net profit was revised down from 3.06 million to 67,000 shekels due to accounting issues.
- The company reported a net loss of 21.3 million shekels in its first-half 2026 results.
- Sales grew 10% to 126 million shekels, but profitability declined significantly.
- Revised 2025 EBITDA figures may have disqualified Tomer Food from its May 2026 stock market entry.
- The company faces negative cash flow and breaches financial covenants with its banks.
- An investigation into inventory valuation was triggered by a CFO appointee's resignation.
Tomer Food has released its delayed first-half 2026 financial reports, showing a mixed performance. While sales increased by approximately 10% to around 126 million shekels, with total revenues reaching 129.5 million shekels, profitability has declined. Gross profit saw a slight decrease to 24.4 million shekels, operating profit narrowed to about 6 million shekels from 6.8 million, and the operating profit margin fell from 5.7% to 4.6%. This indicates difficulty in translating sales growth into improved earnings, partly due to a 37% drop in high-margin storage services revenue. The company attributes this to delayed government contract renewals and inventory write-offs due to pests.
Adjusted EBITDA decreased by about 5% to 10 million shekels, and adjusted net profit shrank by 23% to 1.47 million shekels. The reported net loss of 21.3 million shekels is primarily due to a one-time, non-cash accounting expense of 22.4 million shekels related to a stock market merger. Excluding this, the company still shows a profit, albeit lower than the previous period.
The reports emerge after a significant revision of the 2025 financial statements. Initially, Tomer Food reported a net profit of 3.06 million shekels for 2025, but this was reduced to just 67,000 shekels following an investigation. The investigation was triggered when Avital Perlstein Cherny, appointed CFO, resigned before starting her role due to reservations about the accounting treatment of inventory. The probe uncovered deficiencies in inventory valuation and revenue recognition, with findings suggesting the controlling shareholder's involvement in setting inventory values.
These revised figures raise questions about whether Tomer Food would have met the merger's EBITDA condition for its May 2026 stock market entry. The original 2025 EBITDA of 20.4 million shekels met the condition of less than a 5% decrease from 2024. However, the revised 2025 EBITDA of 16.5 million shekels represents an 11% decrease, failing to meet the threshold required for the merger.
Cash flow from operations was negative at 35.5 million shekels in the first half, due to increased inventory and receivables. The company has about 83 million shekels in bank loans against only 4.7 million shekels in cash and is in breach of financial covenants with its banks, though temporary agreements are in place. Tomer Food is working to separate chairman and CEO roles, strengthen inventory controls, and expects trading to resume after publishing the revised reports. Investors will need to assess a company with growing revenues but lower profitability, significant debt, and questions surrounding its initial market entry data.
