Tarpaz reported its second quarter today, 11 August 2026.
Errors or inaccuracies are possible. Spotted something that looks wrong? Write to me and I will correct it.
A Note That Has To Come First
Tarpaz reports in US dollars, not shekels. Every figure in this piece is in dollars. Anyone comparing them to shekels will get an entirely wrong picture.
What Tarpaz Does
Tarpaz makes and sells ingredients - not finished products.
The areas: flavour and fragrance extracts for food and drink, active ingredients for the food industry, and fine chemicals for pharmaceuticals and cosmetics.
And it is a business with one characteristic worth knowing: the ingredient costs very little relative to the final product, but without it the product does not exist and it cannot easily be substituted - because changing a flavour ingredient forces the customer to re-approve the entire product. Hence the relatively high margins.
And the strategy in recent years is acquisition: Tarpaz buys small and mid-sized ingredient companies around the world and consolidates them. That is worth remembering, because it explains most of the numbers in this report.
The Quarter
| $ thousands | The quarter | A year ago | Change |
|---|---|---|---|
| Revenue from sales | 90,229 | 63,418 | +42.3% |
| Cost of sales | 52,790 | 38,703 | |
| Gross profit | 37,439 · 41.5% | 24,715 · 39.0% | +51.5% |
| Operating profit | 12,100 | ||
| Pre-tax profit | 10,472 | ||
| Net profit | 8,168 | ||
| Attributable to shareholders | 6,727 | ||
| Comprehensive income | 16,093 | ||
| Operating cash flow | 9,978 |
Basic and diluted earnings per share: $0.06.
The Breakdown Management Provides Itself, and This Is the Important Part
The company does not stop at the 42.3% headline. It takes it apart, to its credit.
This is how it describes the quarter's growth:
- Roughly 4.3% from currency effects
- Roughly 7.3% organic growth, currency-neutral
- And everything else from companies whose acquisition completed during 2025 and the first half of 2026
So out of a 42.3% jump, the growth coming from the existing business is single-digit.
And in the first half the picture is similar: revenue of $173.9 million, up 40.5%, of which roughly 7.2% currency and roughly 8.1% organic.
That is not a fault - it is a stated strategy. But it does mean that a reader who sees "42%" and infers explosive demand is reading it wrongly.
What Is Genuinely Improving in the Business
Gross margin rose to 41.5%, from 39.0% in the comparable quarter.
And that is the number that speaks to quality rather than size. An acquisition raises revenue automatically - it does not raise margin automatically. A margin that improves after acquisitions usually means one of two things: either the acquired businesses are more profitable than the core, or the consolidation is genuinely producing savings.
And management attributes the improvement to three factors: efficiency measures, extracting synergies between group companies, and continued high growth.
For the half as a whole the margin rose to 41.7% from 39.0%, and gross profit grew 50.2% - faster than the 40.5% revenue growth. That is exactly the signal you look for.
Two Lines Worth Flagging
The first: research and development. In the first half the spend rose to 4.6% of sales, against 3.6% a year ago and 4.0% for the whole of 2025. That is a genuine increase in investment intensity, not just in the absolute number - and in an ingredients company, development is what produces the next product.
The second: non-controlling interests. Out of net profit of $8,168 thousand, only $6,727 thousand is attributable to the company's shareholders. Meaning roughly 17.6% of the profit belongs to partners in subsidiaries.
That is a direct consequence of the acquisition strategy: when you buy part of a company rather than all of it, part of the profit stays with the partner. Anyone looking at the net profit line alone will overstate the profit accruing to shareholders.
The Balance Sheet
| $ thousands | 30.6.2026 |
|---|---|
| Total assets | 802,987 |
| of which current assets | 200,571 |
| Total liabilities | 487,483 |
| of which current | 225,118 |
| Equity | 315,504 |
| Attributable to shareholders | 277,189 |
Equity is roughly 39.3% of total assets.
And a line that matters for a company that buys companies: equity attributable to shareholders is $277.2 million out of total equity of $315.5 million - the $38.3 million gap is the partners' share in subsidiaries.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
This is a good report, and I want to explain why I dwell on the part that sounds less impressive.
The 42.3% headline is accurate, and it is also not the story. What interests me in an acquisition-driven company is not how much revenue grew - that is close to guaranteed when you buy - but what happens to margin afterwards.
And there the answer is positive: gross margin rose from 39.0% to 41.5%. An acquisition that dilutes margin bought revenue; an acquisition that improves margin bought a business. So far, this looks like the second.
And what I appreciate in this report is that management did the breakdown itself. It could have settled for "42% growth" and let the reader infer. It chose to say: 4.3% currency, 7.3% organic, the rest acquisitions. A company that takes its own number apart voluntarily is a company you can read.
What I hold with an asterisk is the non-controlling interests. 17.6% of the profit does not reach Tarpaz shareholders. And as the strategy continues and more partially-held companies are acquired, the gap between net profit and profit that actually belongs to shareholders could widen. That is not a flaw - it is simply something to compute correctly.
And what I will check next quarter is organic growth on its own. Acquisitions can continue as long as there is money and there are companies to buy, but what determines long-term value is whether the combined business grows from within. 7.3% in the quarter and 8.1% in the half are perfectly reasonable numbers for this sector. If they rise, this is a different company. If they fade while acquisitions continue, then what is here is mostly consolidation, not growth.
