Damri sold more apartments in the quarter: so why did the profit fall?
Construction company I.H. Damri increased apartment sales, but rising financing costs and margin erosion led to a decline in net profit. We analyze the company's Q2 2026 financial results.
I.H. Damri, one of Israel's largest construction firms, has published its results for the second quarter and the first half of 2026. Controlled by Yigal Damri, the company increased apartment sales and recorded a 5.8% rise in quarterly revenue to approximately 398.9 million shekels. However, net profit fell to 63.8 million shekels, compared to 90 million shekels in the same quarter last year, due to margin erosion and higher financing expenses. The board of directors has approved a dividend of 24 million shekels.
In the second quarter, Damri sold 237 apartments for 424.7 million shekels, up from 176 in the corresponding quarter of 2025. The company attributes this growth partly to sales within the "Mechir Lemishtaken" (Price for the Resident) project.
Year-to-date, the company has sold 469 apartments, with another 30 purchase requests signed. As of late June, Damri is constructing 5,086 apartments across 23 projects, with 1,523 units already sold for a total of 3.16 billion shekels—a backlog expected to be recognized as revenue as construction progresses.
Despite higher sales, gross profit for the quarter fell to 129.7 million shekels from 149.3 million shekels last year, driven by rising construction costs and a shift in project mix.
Net financing expenses climbed to 26.3 million shekels, nearly double the previous year's figure, due to higher interest rates on bank credit and costs related to tenant relocation in urban renewal projects. This, combined with lower interest income from deposits, weighed on the bottom line.
On a half-yearly basis, revenue fell to 828.6 million shekels from 968.8 million shekels, and net profit dropped to 139.3 million shekels from 294.9 million shekels. The primary difference is a one-time event: the sale of land in Hadera in the first half of 2025 for 181 million shekels. Excluding land sales, core revenue actually rose by 5.2% to 820.9 million shekels. However, the gross profit margin on apartment sales slipped from 37% to 33.8%, illustrating ongoing pressure on margins in the sector.
These results come as the Bank of Israel lowered interest rates to 3.5% in July, a move expected to support mortgage demand. Notably, 28% of the company's first-half sales utilized favorable financing terms, such as deferred payments and "contractor loans," which help bridge high interest rates but carry risks if property prices decline.
Damri's stock is part of the TA-35 and TA-Real Estate indices. The company's equity stood at 4.16 billion shekels at the end of June (41.3% of the balance sheet) following a 420 million shekel share issuance during the quarter.
Nurit Toaito, Deputy CEO of I.H. Damri, stated:
"We are concluding the second quarter with revenue growth and the sale of 237 housing units. While Operation 'Lion's Roar' caused a temporary slowdown, we are seeing a gradual stabilization and a cautious return of demand. We have strengthened our financial robustness and remain focused on long-term development."
