Israeli Environmental Ministry Reduces Carmel Corp's Fine to 1.8 Million Shekels Amid Ongoing Appeal

The Israeli Ministry of Environmental Protection has partially reduced a fine imposed on Carmel Corp's cooperative growers association to 1.8 million shekels, down from an initial 4.2 million shekels. The fine relates to alleged violations of the Hazardous Substances Law. The growers association, controlled by the public company Carmel Corp, plans to appeal the decision.

In January, the ministry announced its intention to fine the cooperative, which includes wineries from Rishon Lezion and Zichron Yaakov, for these alleged breaches. Carmel Corp had indicated it would present arguments to reduce the penalty, and legal advisors believed there were grounds for a reduction. The ministry accepted some of these arguments, granting an additional 20% reduction beyond the standard 20% reduction allowed under regulations for preventive measures and mitigating circumstances.

Despite the reduction, the cooperative rejected the ministry's decision and intends to file an appeal. Meanwhile, Carmel Corp reported a sales increase in the first quarter of the year, partly due to the timing of Passover. However, increased competition and higher financing costs led to a 39.9% drop in net profit to 4.1 million shekels.

In March, Carmel Corp's board approved amendments to its credit commitments, aiming to enhance financial flexibility. The company acknowledged it has yet to fully implement its growth strategies involving partnerships, mergers, and acquisitions, and remains behind its 2027 financial targets, which include sales between 680 and 730 million shekels, gross profitability around 30%, operating profitability near 10%, and EBITDA of approximately 14%.