Sugat published its second-quarter report. It is a classic food manufacturer's set of accounts, with no unusual lines.
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The Quarter
| NIS millions | The quarter | Share of revenue |
|---|---|---|
| Revenue | 187.8 | |
| Gross profit | 40.1 | 21.4% |
| Operating profit | 11.7 | 6.2% |
| Pre-tax profit | 9.7 | 5.2% |
| Net profit | 7.6 | 4.1% |
| Attributable to shareholders | 7.3 | |
| Non-controlling interests | 0.4 | |
| Basic earnings per share | NIS 0.12 | |
| Balance sheet total | 1,250.6 | |
| Shareholders' equity | 771.3 |
Where the Profit Erodes
From NIS 40.1 million of gross profit, NIS 11.7 million of operating profit was left. NIS 28.4 million was taken out.
That is, only about 29% of the gross margin survives to the operating line.
And that is the familiar range in food manufacturing and distribution.
| Q2 2026 | Gross margin | Operating margin | Survival |
|---|---|---|---|
| Neto Malinda | 13.0% | 5.2% | 40% |
| Yochananof | 22.0% | 7.0% | 32% |
| Sugat | 21.4% | 6.2% | 29% |
| Victory | 24.7% | 3.8% | 15% |
And the explanation is common to all of them: the expenses between the two lines - marketing, distribution, logistics and head office - are largely fixed, and do not fall in proportion to turnover.
The practical meaning: in this sector, the gross margin tells you about procurement and pricing, and survival tells you about the cost structure. Two separate questions, and only the second is fully within the company's control.
And Financing: Only 16.8%
From NIS 11.7 million of operating profit, NIS 9.7 million was left before tax. NIS 2.0 million was taken out.
And that is a low share, consistent with a balanced balance sheet: NIS 1,250.6 million of assets on equity of NIS 771.3 million - a ratio of 1.6 to one.
And for comparison, the same day: Victory stands at 5.1 and financing takes 43.5% from it; Electra Consumer at 7.1 and financing takes 59.6%.
What separates them is the kind of business: a manufacturer owns its plant; a retailer holds a branch network on leases. And the second is today recorded as a lease liability on the balance sheet, while the first is recorded as a fixed asset.
And the Tax
NIS 9.7 million before tax and NIS 7.6 million after - that is, tax of NIS 2.1 million, an effective rate of 21.6%.
Close to Israel's corporate rate. A report clean of exceptional items on that line - and that stands out at the end of a day on which we saw tax rates of zero, 8.6%, 72.3% and 78.8%.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
What I take from this report is that it describes itself without intermediation.
A 21.4% gross margin, 29% of it surviving, financing taking a sixth of what is left, and tax taking its rate. There is no single line deciding the outcome in place of the activity, and nothing needs stripping out.
And what I hold as the insight from the whole day is that balance-sheet structure decides more than margin. Sugat earns less than Victory at the gross line, and arrives at the bottom line with a higher net margin - 4.1% against 1.6% - because financing takes less than a third of what it takes from Victory.
And what I would look for in the full accounts is raw-material prices. At a food manufacturer, the gross margin derives from a world commodity price outside the company's control - and when it moves, the margin follows within a quarter or two.
(It is important to stress: this is my personal opinion only, and nothing herein constitutes a recommendation to take any action.)
