The imports of Chinese vehicles into Israel are causing trouble for the importer of Mazda and Ford vehicles, Delek Automotive Systems (TASE: DLEA), controlled and managed by Gil Agmon, but the acquisition of recycling company Veridis Environment (TASE: VRDS) has proved itself in halting the decline in the company’s results.
In the second quarter of this year, deliveries of Mazda vehicles fell by 40%, to 1,601. In the first half, deliveries of the Japanese brand’s vehicles were down 28%, at 5,571.
Delek Automotive Systems imports five different automobile brands, but most of its sales are of Mazda, Ford, and BMW vehicles. In total, the company sold 2,696 vehicles in the second quarter, a third fewer than in the second quarter of 2024. In the first half, the total number of vehicles sold was 9,005, 17.3% fewer than in the first half of last year. Like other vehicle importers in Israel, Delek Automotive Systems also holds franchises for Chinese brands, in its case Dongfeng and Nio, but their sales were not yet substantial in the second quarter.
Delek Automotive Systems’ quarterly revenue totaled NIS 1.3 billion, 11% less than in the corresponding quarter of 2024. It will be recalled that, two years ago, Veridis Environment, 50% controlled by Delek Automotive Systems, completed the acquisition of Infinya (formerly Hadera Paper) from private equity firm FIMI Opportunity Funds for NIS 2.35 billion This brought the group a business converting recycled paper into cardboard. The decline in Delek Automotive Systems’ second quarter revenue stemmed from lower vehicle sales, and a decline in sales of paper, partly offset by a rise in sales of cardboard.
Delek Automotive Systems’ gross profit as a percentage of sales fell from 16.5% in the second quarter of 2024 to 14.8% in the second quarter of this year, leading to a 15% decline in operating profit to NIS 118 million. On the bottom line, however, the company posted a net profit of NIS 41 million, which compares with a net loss of NIS 9 million in the corresponding quarter, and in the first half of this year it doubled its net profit in comparison with the first half of last year, to NIS 100 million. The company said that its net profit was positively impacted by lower financing costs.
Veridis’s contribution
An examination of the results by segment reveals how much Veridis now contributes to Delek Automotive Systems. Revenue from vehicle imports fell 23% year-on-year to NIS 568 million. Profit on the vehicle segment plummeted 65% to just NIS 28 million. On the other hand, profit in all areas of Veridis’s business, which covers environmental protection, water desalination, energy, and cardboard, rose in comparison with the corresponding quarter, leading to a profit in this segment of NIS 122 million, which explains most of the group’s profit. This is despite the fact that, overall, profit in this segment was 18% lower than in the corresponding quarter. Veridis’s business stemmed most of the decline.
Earlier this year, Delek Automotive Systems bought 50.1% of vehicle leasing company EuroDrive, and it has an option on the remaining shares. EuroDrive provides leasing services and sells "zero kilometer" vehicles (i.e., new vehicles that have already been registered by a dealership and are therefore technically secondhand), and used vehicles from trade-in deals. According to Delek Automotive Systems, it also specializes in premium cars. In the first half of this year, EuroDrive sold 2,800 vehicles, which compares with 3,700 in the first half of last year.
In the past year, Delek Automotive Systems’ share price has risen 24%, giving it a market cap of NIS 2.5 billion. In the past five years, the share price has risen 61%, but it is down about 50% from its peak at the end of 2022, when car imports were booming in Israel.
Published by Globes, Israel business news - en.globes.co.il - on August 19, 2025.
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