Prime Energy published its second-quarter report. It is the extreme version of a pattern that recurred across the entire energy sector today.
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The Quarter
| NIS millions | The quarter | Share of revenue |
|---|---|---|
| Revenue | 35.8 | |
| Gross profit | 16.5 | 46.2% |
| Operating profit | 8.8 | 24.7% |
| Pre-tax loss | -13.5 | |
| Net loss | -10.5 | |
| Attributable to shareholders | -10.2 | |
| Basic loss per share | -NIS 0.35 | |
| Balance sheet total | 1,875.1 | |
| Shareholders' equity | 200.0 |
Financing Took 2.5 Times the Operating Profit
NIS 8.8 million of operating profit. A loss of NIS 13.5 million before tax.
NIS 22.3 million was taken out - 252.7% of operating profit.
And this is the most extreme figure we saw today, and it makes sense given the balance sheet.
| Balance sheet total | NIS 1,875.1 million |
| Shareholders' equity | NIS 200.0 million |
| Leverage ratio | 9.4 to one |
| Balance sheet against quarterly revenue | 52 times |
NIS 1.88 billion of assets produce NIS 35.8 million of revenue in a quarter, and behind them stands equity of only NIS 200 million. All the rest is debt, and the interest on it falls below the operating line.
And here is how that looks against the other energy filers today:
| Q2 2026 | Operating margin | Financing as a share of it | Leverage |
|---|---|---|---|
| Generation Capital | 98.0% | 3.1% | 1.4 |
| Dalia Energy | 11.7% | 63.0% | 3.4 |
| Nofar Energy | 52.0% | 121.9% | 4.8 |
| Prime Energy | 24.7% | 252.7% | 9.4 |
Four companies from the same world, and four points on the same spectrum - the higher the leverage, the less of the operating profit survives.
And What the Tax Did
A pre-tax loss of NIS 13.5 million, and a net loss of NIS 10.5 million.
The tax line reduced the loss by about NIS 3.0 million - recognition of a tax asset in respect of the loss.
And that is not cash. The recognition is conditional on an assessment that there will be future profit to offset against, so the figure that describes the quarter is the pre-tax loss.
And the Margin That Does Not Help
A gross margin of 46.2% and an operating margin of 24.7% are good numbers by any standard.
And that is exactly what makes the report instructive: the activity itself is entirely profitable. What turns the quarter into a loss is not the business but the financial structure beneath it.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
This report is the sharpest expression of something I saw four times today.
In infrastructure, the operating margin describes the asset - and leverage determines whether any of it reaches the shareholder. Prime Energy earns 24.7% at the operating level and loses 29% of revenue at the bottom line, and the entire difference is interest.
And what I think should be said fairly is that this is not necessarily distress. Infrastructure is built with debt, and the early years are always the heaviest - financing is full, and revenue is not yet. As the pipeline comes into operation and the debt is repaid, the ratio improves.
And what does signal risk is the equity: NIS 200 million against a balance sheet of NIS 1.88 billion. That is a thin cushion, and a loss of NIS 10.5 million in a quarter is about 5% of it.
So the number I will follow is the ratio between operating profit and financing expenses. Today it is 8.8 against 22.3 - that is, 0.4 to one. For the quarter to end in profit, it needs to cross one.
And what I would look for in the full accounts is how many facilities are already connected and how many are under construction. That is the figure that determines when that happens, and it is not in the structured filing.
(It is important to stress: this is my personal opinion only, and nothing herein constitutes a recommendation to take any action.)
