Delek Automotive Transfers Veridis Shares to Subsidiary to Strengthen Equity Amid Hailo Investment Losses
Delek Automotive transferred 15 million shares of Veridis to its subsidiary Delek Motors, valued at approximately 645 million shekels, to bolster Delek Motors' equity and avoid breaching loan covenants tied to the 2018 acquisition of Veridis. This unusual move was disclosed in Delek Automotive's Q2 financial report and is linked to the ongoing financial strain caused by its investment in the technology company Hailo. Due to losses from Hailo, Delek Automotive recorded impairments of 242 million shekels at the end of 2025 and an additional 161 million shekels in the current reports.
Delek Motors, fully owned by Delek Automotive, has transferred between 650 and 700 million shekels back to the parent company over the years, partly to finance the Veridis purchase. The share transfer aims to consolidate these financial flows and prevent negative impacts on Delek Motors. Post-transfer, Delek Motors will hold 10% of Veridis shares, while Delek Automotive retains 37%. Delek Motors operates as the importer and seller of brands like Mazda, Ford, BMW, Nio, and Dongfeng, representing the company's core revenue and cash flow source.
The 2018 bank loans of 1.05 billion shekels to Delek Automotive included covenants based on Delek Motors' equity ratio. Although Delek Motors has not breached these covenants yet, concerns remain ahead of the year-end evaluation, prompting the share transfer to stabilize the financial position. Since the start of 2026, Delek Automotive's market value has dropped 41% to 1.75 billion shekels, returning to late 2020 levels and losing two-thirds of its peak value from August 2022.
The company’s vehicle deliveries plunged 42% in H1 2026 to 9,005 units, with Mazda deliveries falling 68% to 1,786 units. Q2 deliveries also declined to 2,411 vehicles, reducing market share to 3% from 5.7% a year earlier and 25% two decades ago. Despite this, Q2 vehicle sector revenues rose to 748 million shekels from 568 million shekels the previous year, though H1 revenues fell slightly to 1.67 billion shekels from 1.72 billion shekels.
Delek Automotive reported a working capital deficit of 481 million shekels at the end of Q2, with shareholders’ equity decreasing to 1.25 billion shekels from 1.475 billion shekels a year earlier. Consolidated revenues including Veridis and Infinia reached 3.26 billion shekels in H1 2026, a 1% increase aided by Eurodrive acquisition and improved Veridis performance. Operating profit rose to 132 million shekels in Q2, but financing expenses of 226 million shekels, mainly due to Hailo impairments, led to a net loss of 88 million shekels versus a 55 million shekel profit in Q2 2025. The first half of 2026 ended with a 13 million shekel loss compared to a 92 million shekel profit in H1 2025.
Other business segments showed better results: the environmental sector (Veridis) generated 541 million shekels in H1 2026, up from 434 million shekels, and Infinia contributed 630 million shekels, compared to 603 million shekels the previous year.
