Neto Melinda: Sales rose but net profit fell by 12.5%, shares are falling
Food importer Neto Melinda concluded the second quarter of 2026 with an 8.6% increase in revenue to 1.3 billion shekels, but net profit fell by 12.5% to 44.3 million shekels.
Neto Melinda, the food importer controlled by Dudi Ezra and David Matzasa, concluded the second quarter of 2026 with an increase in sales that did not translate into an improvement in the bottom line. The company's revenue rose by 8.6% compared to the same quarter last year to 1.3 billion shekels, but net profit fell by 12.5% to 44.3 million shekels. The decline in profit was recorded, among other things, due to an increase in selling and marketing expenses and a jump in financial expenses, which stemmed mainly from exchange rate differences. Neto Melinda's shares are plunging by more than 10% on the Tel Aviv Stock Exchange following the publication of the reports.
The company, managed by Ofer Lev and Oren Avni, operates in three segments: the local market, which includes marketing and distribution of fresh chicken and meat with high-level kashrut, import and marketing, and the group's factories, including Tivon Vil, Williger Industries, Delidag, Shloshet HaOfim, Palace Industries, and Rich Industries. Neto noted that the increase in sales in the quarter was recorded despite the timing of the Passover holiday — a period of accelerated shopping in Israel — which this year fell in the first quarter of the year, while in the same quarter last year, shopping for Passover was also in the second quarter. According to the company, the comparison was also affected by a decrease in sales in the second quarter of 2025 due to the war, as well as foot-and-mouth disease that broke out in Europe at that time and led to a decrease in fresh meat imports.
However, despite the increase in revenue, Neto's report shows a notable gap between continued growth in sales and erosion in profitability and a jump in selling and financial expenses. Thus, for example, while gross profit for the quarter rose by 8.4% and its rate from sales remained almost unchanged, selling and marketing expenses soared by 13.4% and amounted to about 88 million shekels. The company attributes the increase mainly to the rising cost of cold storage, vehicle maintenance, and transportation. As a result, Neto's operating profit (profit from regular operations before other income) rose in the quarter by a moderate rate of only 1.5%, to 65.7 million shekels, and its rate from sales fell from 5.3% to 4.9%. However, a one-time capital gain of about 3 million shekels from the sale of the holding in the granddaughter company Delidag Eitan helped Neto increase operating profit to 69 million shekels.
Looking at the entire first half of 2026, operating profit even fell by 1.5% to 153.4 million shekels, and its rate from sales also showed a decline: from 6.2% in the first half of 2025 to only 5.3% in the first half of 2026. The notable damage came in the financing item. Neto's financial expenses in the second quarter jumped by more than 2.5 times — from 4.4 million shekels in the same quarter to 11.2 million shekels in the second quarter of this year. At the same time, financial income plummeted from 3.8 million shekels to only 350 thousand shekels. As a result, net financial expenses jumped from 700 thousand shekels in the same quarter to 10.9 million shekels in the current quarter — an increase of 15 times. Neto attributes this sharp jump in financial expenses mainly to currency exchange rate differences. The jump in financial expenses reduced profit before tax in the quarter by 13.5%, to 57.7 million shekels.
The sectoral picture in the quarter was not uniform. The main growth engine was the import sector, whose sales jumped by 29.4% to 533 million shekels and its sectoral profit rose by 24% to 39.4 million shekels. In contrast, in the local market sector, sales rose by 2.2% to 623 million shekels, but the sector's profit fell by 5.6% to 25.4 million shekels. The most acute weakness was recorded in the Neto group's factories. The sector's sales fell by 15% to 171 million shekels, while the sectoral profit plummeted sharply by 44% to only 4.2 million shekels. Alongside the publication of the reports, Neto Melinda announced a dividend distribution of 18 million shekels, following the dividends it announced in the first half of the year.
