Diplomat reports a drop in profits: the giant faces financial headwinds

Diplomat, which specializes in the import, marketing, sales, and distribution of over 100 international and local mass-market brands, has published its financial results for the second quarter of 2026.

According to the data, revenues totaled approximately 865 million shekels, compared to 958 million shekels in the corresponding quarter last year, partly due to a negative impact of 50 million shekels from currency translation differences. The revenue breakdown is as follows:

1. Revenues in Israel totaled approximately 535 million shekels, compared to 552 million shekels last year, mainly due to the high baseline set by the "Am Kelavi" campaign in the previous year.

2. Revenues from operations abroad—South Africa, Georgia, New Zealand, and Cyprus—totaled approximately 330 million shekels, compared to 406 million shekels last year. Excluding currency translation effects, revenues abroad reached 380 million shekels. The decline is largely attributed to an economic slowdown in South Africa amid protest waves that have since subsided.

Gross profit for the second quarter of 2026 stood at approximately 200 million shekels, compared to 208 million shekels last year. Gross margin improved to 23.2% from 21.7% in the same quarter last year.

Operating profit was approximately 35 million shekels, compared to 41 million shekels in the same period last year. The operating margin stood at 4.1% of revenues, compared to 4.3% last year.

Net profit for the Diplomat group in the second quarter of 2026 was approximately 23 million shekels, compared to 55 million shekels in the same quarter last year. The decline is primarily due to a one-time financial gain of 29 million shekels recognized last year from the exercise of an option to purchase remaining shares in Neve Pharma. Excluding one-time effects, net profit was 23 million shekels compared to 25 million shekels in the same quarter last year.

Main results for the first half of 2026:

Revenues for the first half of 2026 totaled approximately 1.77 billion shekels, compared to 1.84 billion shekels last year. Excluding negative translation differences of 66 million shekels, revenues reached 1.83 billion shekels, similar to the previous year.

Gross profit rose by approximately 1% to 405 million shekels, with gross margin increasing to 23.0% from 21.9% in the first half of 2025.

Operating profit was approximately 75 million shekels, with the operating margin rising to 4.3% of revenues from 4.1% in the same period last year.

Net profit for the first half of 2026 was 44 million shekels, compared to 72 million shekels last year. Excluding the one-time Neve Pharma effect, net profit would have been 51 million shekels compared to 43 million shekels last year—a 19% increase.

The company holds a cash balance of approximately 82 million shekels, with a net financial debt of 331 million shekels. Diplomat's equity stands at approximately 1.01 billion shekels, representing 49% of the total balance sheet, following dividend distributions of 30 million shekels year-to-date.