PETAH TIKVA, Israel – Strauss Group announced yesterday its financial results for the full year 2022 with revenue growth countered by profit and margin erosion. The company’s results demonstrate growth in most categories, including the coffee business in Brazil and Eastern Europe, the water business in Israel and China, and most of Strauss’s business categories in Israel.
Revenues were impacted by the recall in the confectionery division and the partial suspension of production in Sabra for several months in 2022. Sabra’s dips and spreads manufacturing site in Virginia and the confectionery plant in Nof Hagalil resumed production during 2022 and have regained market share since.
In March 2023, the confectionery division’s market share reached an average of 24%2, which is close to market share prior to the recall, while Sabra’s share of US hummus market was 31.2% at the end of 2022 and was up to 37.6% in recent weeks, compared to 61.6% before the shutdown3.
Strauss Group ‘s revenue in 2022 grew 6.5% to NIS 9.5 billion (organic, excluding foreign currency effects). Gross profit was down 12.3% and amounted to NIS 2.8 billion, with the gross margin falling to 29.8% compared to 36.9% in 2021.
Gross profit and margin erosion was largely due to the recall in the confectionery division, the adjustment plan in the Sabra plant and the rising prices of green coffee, raw milk, packaging materials and energy. This led to erosion of the Company’s operating profit, which dropped 61.4% compared to 2021 to NIS 379 million, and to a decline of 72.9% in net profit, which dropped to NIS 174 million.
Total Strauss Coffee sales reached NIS 4,804 million (US$1.33 billion), up 37.7% from 2021. Organic sales (excluding foreign exchange) rose 31.7 %. Ebit rose 30.9% to NIS 460 million (US$ 127.6 million). The EBIT margin was 9.6%.
International Coffee sales rose 45.3% to NIS 4,026 million (US$ 1.117 billion). Organic sales growth (excluding FX) amounted to 37.9 %. Ebit surged 84.8% to NIS 363 million (US$ 100.7 million). The EBIT margin was 84.8%.
International Coffee figures include Strauss’s 50% share in the Três Corações joint venture (3C) – Brazil – a company jointly held by the Group (50%) and by the local São Miguel Group (50%).
Strauss Coffee’s business in Israel grew 6.9% in 2022 to NIS 778 million (US$215.9 million), thanks to increased sales to the retail market and AFH channel. However, operating profit and the operating margin eroded, mainly due to the increase in green coffee prices as well as higher energy and packaging material costs.
Sales by the coffee company in Brazil grew in 2022 to NIS 2.66 billion (50% ownership) or US$738.1 million, an increase of 43.7% in local currency, largely the result of higher sales prices as well as the weakening of the shekel against the Brazilian real.
The coffee business in Eastern Europe also delivered double-digit growth in local currency in all countries where the company is active: Russia-Ukraine, Poland, Romania and Serbia.
