Shikun & Binui Energy's performance improved, but the strong shekel hit the bottom line
Shikun & Binui Energy concluded the second quarter of 2026 with a 40% jump in revenue to 94 million shekels. Despite increasing gross profitability to 43%, a surge in financing expenses led to an 11% increase in net loss, reaching 79.9 million shekels.
Against the backdrop of its sale to Generation, Shikun & Binui Energy concludes the second quarter of 2026 with a 40% jump in revenue compared to the same quarter last year, totaling 94 million shekels. The company also managed to increase its gross profitability from 25% in April–June last year to 43% in the same period this year, and sharply reduce its operating loss from 37.3 million shekels in the same quarter to a loss of 6.7 million shekels in the second quarter of this year. However, a more than twofold increase in its financing expenses to 75.4 million shekels led to an 11% increase in the bottom-line loss, to 79.9 million shekels.
The company's main operating segment is electricity generation from natural gas, through the Ramat Hovav and Hagit East power plants, in each of which it holds 50%, and the Etgal power plant in Ashdod (100%), which it began operating in May last year (capacity of 189 MW), and revenues there reached 174 million shekels (these were later offset from the accounting revenue calculation due to adjustments regarding the holding rate) and rose by 1% compared to their volume in the same quarter. The increase in revenue from the operation of Etgal was offset by a decline in the performance of the other two plants and the impact of the tariff ceiling set by the Electricity Authority, which came into effect in February.
The operating segment that recorded the sharpest growth, 7.9 million shekels compared to 2.6 million in the same quarter, is the company's European activity, following the start of operation of a 71 MW solar project in Romania in the third quarter of last year. In the coming quarters, it is expected to record further growth there following the start of commercial operation in June of another project in Romania with a capacity of 104 MW plus storage capacity of 193 MWh.
An impairment of one of the projects in the USA in the same quarter and the reversal of an impairment from the Etgal project allowed Shikun & Binui Energy to move from a loss of 5.6 million shekels in the other income item in the same quarter to an income of 15.6 million shekels in the second quarter of this year, which helped reduce the quarterly operating loss. The strong shekel hurt the company and led to a negative revaluation of loans taken for operations in Europe and the USA. Thus, the loss in this item reached 52.8 million shekels, 74% higher than its volume in the same quarter, and it was the main part of the increase in Shikun & Binui Energy's financing expenses, which, as mentioned, pushed for an increase in the bottom-line loss.
Shikun & Binui Energy holds an installed project backlog of 3.3 GW and an additional capacity of 4 GWh of storage. Alongside 900 MW and 3.3 GWh of storage under construction and in preparation for construction. It operates in Israel, Romania, Italy, and the USA. Israel is the main destination for activity with facilities in commercial operation with a capacity of 2.75 GW, of which 2 GW are in gas power plants, together with a storage capacity of 3.6 GWh. Israel is also the main construction destination with 515 MW and 2.2 GWh of storage under construction and in preparation for construction. Of these, in June it completed a financial closing for the construction of a solar project in Ashalim with 150 MW and a storage capacity of 460 MWh, whose commercial operation is planned for 2027.
At the end of July, the deal was signed according to which the Generation fund will acquire the company in exchange for 4.45 billion shekels. This is through a reverse triangular merger via PowerGen, Generation's subsidiary. As a result, Shikun & Binui Energy will cease to be a traded company but will continue as a reporting company regarding the bonds it issued. This value is 12% higher than the company's current market value, which stands at slightly less than 4 billion shekels, and this is after a 12% increase in the share price since the beginning of the year.
