Eltek Ltd. reported third‑quarter 2025 results with revenue of $13.3 million, a 6% sequential increase from $12.5 million in Q2 2025 but a 1.5% decline from $13.5 million in Q3 2024. Defense customers accounted for roughly 63% of the quarterly revenue, underscoring the company’s concentration in the defense sector while also highlighting the strength of that customer base.
Gross profit fell to $1.6 million, giving a gross margin of 12% versus 26% in Q3 2024. The sharp margin contraction is driven by a combination of higher depreciation expenses, increased raw‑material consumption due to process instability, and higher energy costs, in addition to the impact of the U.S. dollar’s depreciation against the Israeli shekel, which raised the dollar value of NIS‑denominated expenses.
Net loss for the quarter was $0.2 million, or $‑0.03 per diluted share. The loss is largely attributable to the currency effect, but management also cited higher depreciation charges and operational inefficiencies linked to the ramp‑up of new coating lines. CEO Eli Yaffe noted that the company is “investing significant effort in improving manufacturing efficiency and achieving its targeted gross margin” while acknowledging that the instability is partly due to engineering and manpower integration.
Eltek is in the final stages of preparing a new production hall for coating lines, a key investment aimed at expanding capacity and supporting long‑term growth. The company’s guidance for the remainder of 2025 remains unchanged, but the management outlook signals caution about near‑term margin compression while expressing confidence that the new capacity will help restore profitability once operational issues are resolved.
The market reacted sharply, with Eltek’s shares falling 15.91% in pre‑market trading after the earnings release. Investors focused on the net loss, the 14‑percentage‑point drop in gross margin, and the ongoing operational challenges, all of which exceeded expectations and raised concerns about short‑term financial health.
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