Neto Holdings published its second-quarter report. It demonstrates better than any other report this week what a holding layer does to a shareholder.
Errors or inaccuracies are possible. Spotted something that looks wrong? Write to me and I will correct it.
The Quarter
| NIS millions | The quarter | Share of revenue |
|---|---|---|
| Revenue | 1,327.6 | |
| Gross profit | 172.9 | 13.0% |
| Operating profit | 71.9 | 5.4% |
| Pre-tax profit | 58.4 | 4.4% |
| Net profit | 44.2 | 3.3% |
| Attributable to shareholders | 19.6 | |
| Non-controlling interests | 24.7 | |
| Basic earnings per share | NIS 5.86 | |
| Balance sheet total | 2,399.7 | |
| Shareholders' equity | 1,386.6 |
The Line That Decides: 55.8%
Of net profit of NIS 44.2 million, NIS 24.7 million is attributable to non-controlling interests.
That is, most of the profit - 55.8% of it - does not belong to Neto Holdings shareholders.
And this is not a marginal accounting phenomenon. It is the central point of the report.
A company holding control of a subsidiary consolidates 100% of its results - all the revenue, all the gross profit, all the operating profit. Only at the end does it set aside the partners' share as a separate line.
The practical meaning: every ratio computed above - a 13.0% gross margin, a 5.4% operating margin - describes the consolidated activity, not the shareholder's share in it.
The figure relevant to a Neto Holdings shareholder is NIS 19.6 million, not 44.2.
And against consolidated revenue of NIS 1,327.6 million, that is 1.5%.
And What Makes It Unmistakable: Neto Malinda
On the same day Neto Malinda also filed a quarterly report, and the revenue line in it is identical - NIS 1,327.6 million.
Not similar. Identical, to the shekel.
| Q2 2026 | Neto Holdings | Neto Malinda |
|---|---|---|
| Revenue | 1,327.6 | 1,327.6 |
| Gross profit | 172.9 | 173.0 |
| Operating profit | 71.9 | 69.0 |
| Net profit | 44.2 | 44.3 |
| Attributable to shareholders | 19.6 | 43.4 |
| Minority share | 55.8% | 1.9% |
And this comparison teaches everything you need to know about a pyramid structure.
Exactly the same business activity is reported twice, in two listed companies. Revenue is identical, net profit almost identical - and what reaches the shareholder differs by more than a factor of two.
The explanation is simple: Neto Malinda is the operating company, and Neto Holdings holds a stake in it. A shareholder in Neto Holdings sits one layer further from that profit, and so their share is smaller.
Small differences between the two columns - 172.9 against 173.0 at the gross line, 71.9 against 69.0 at the operating line - arise from consolidation adjustments and from expenses at the holding company itself.
The practical conclusion for the reader: when two companies from the same group trade in parallel, "net profit" is not a figure you can compare between them. Only "attributable to shareholders" is.
The Rest of the Report
From NIS 71.9 million of operating profit, NIS 58.4 million was left before tax - NIS 13.5 million was taken out, which is 18.8% of operating profit. That is a relatively low share, and it is consistent with moderate balance-sheet leverage: NIS 2,399.7 million of assets against equity of NIS 1,386.6 million, a ratio of 1.7 to one.
And the effective tax rate, 24.2%, is close to Israel's corporate rate.
The gross margin, 13.0%, is characteristic of food distribution - a sector of large turnover and thin margins, where profit is built from volume rather than from pricing.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
I think this is one of the most useful reports I read this week, and not because of its figures.
It cleanly demonstrates something that is hard to explain in the abstract: two listed companies can report exactly the same activity and present their respective shareholders with an entirely different outcome. NIS 1,327.6 million of revenue in both, and NIS 19.6 million against NIS 43.4 million to the shareholder.
And it is worth saying explicitly: this is not a defect and not a trick. It is an ownership structure, it is entirely visible in the accounts, and it is legal and common. The problem only begins when you read the wrong line.
And the practical lesson I take is a single rule: at any company with minority interests, the first line I look for is "attributable to shareholders", and only then net profit. In this week alone I saw that gap range from 1.9% to 55.8% - and at Alony-Hetz it even reversed the sign.
And what I would check in this group is the precise holding percentage and the operating company's dividend policy - because at a holding company, what actually reaches the top is what is distributed, not what is recorded.
(It is important to stress: this is my personal opinion only, and nothing herein constitutes a recommendation to take any action.)
