Ashtrom predicts housing market recovery as stock price declines
Ashtrom Group reported second-quarter losses driven by high financing costs. The company detailed sales figures for major projects and outlined its forecast for a residential market rebound in 2027.
Ashtrom Group has released its financial reports for the first half of the year, revealing a net loss of 115 million shekels. Investors reacted swiftly, sending the company's stock down by 5.5%. Year-to-date, the stock has lost over 23% of its value.
The group recorded losses in its residential rental and concession sectors, while profit margins in construction and infrastructure saw a steep decline. Of the 115 million shekel net loss, 76 million shekels were incurred in the second quarter, largely due to heavy financing expenses.
In the residential rental sector, despite generating 53 million shekels in gross profit, the division recorded a sectoral loss of 7 million shekels, prompting the group to seek new partners for this activity. The concessions sector, which focuses on large-scale national infrastructure and energy projects, also posted a 3 million shekel loss. While revenues in this field rose by 5% to 1.35 billion shekels in the first half of 2025, gross profit margins fell from approximately 10% last year to 7% this year. The company attributed the decline in contracting activity and profits to the initiation of new projects and war-related challenges.
Ashtrom Residential reported revenues of 215 million shekels for the second quarter, with a sectoral profit of 23 million shekels. Profit margins in this sector dropped sharply from 24% in the second quarter of last year to 14% this year. The company sold 52 apartments across 21 projects nationwide during the quarter. Flagship developments, including projects on Einstein, Alterman, and Zichron Yaakov streets in Tel Aviv, as well as the Tar'ad project in Ramat Gan, each recorded only one sale during the first half of the year.
Deputy CEO and controlling shareholder Oren Nussbaum addressed the residential sector's challenges during an investor call:
"While we continued to increase revenue volumes, profits narrowed because construction costs have risen in recent years, while sales prices have not kept pace. We expect this sector to recover during 2027 and are preparing our housing units to meet the demand we anticipate in the coming years. We have approximately 4,300 units ready for marketing, with expected revenues of 14 billion shekels and a projected gross profit of 2.4 billion shekels to be recognized in the future."
Nussbaum added:
"We know the sector is currently experiencing a slowdown. We personally expect that by the end of this year or the beginning of next, we will see a significant exit from the current stagnation and a continuation of robust demand growth. Following continued interest rate cuts and the upcoming elections, we believe the country will set out on a new path of political stability, allowing us to move forward."
