PETACH TIKVA, Israel – Strauss Group reported on Wednesday a 15% increase in its third quarter net profit, owing to growth in its home market and in its international dips and spreads business.
Revenue fell 2.4 percent to 2.16 billion shekels. Excluding foreign currency effects – mainly the depreciation of the Brazilian real against the shekel – organic sales grew 2.9 percent.
Strauss, a maker of snacks, fresh food and coffee, is the second-largest company in the Israeli food and beverage sector.
Chief Executive Giora Bardea said the company outpaced market growth in Israel, increasing its share of the food and beverage sector slightly to 11.9 percent. That was up from 11.6 percent a year earlier, the company said.
Giora Bardea, President and CEO of Strauss Group (November 14, 2018):
“Strauss Group continues to deliver strong performance. The company’s sales and profit continue to consistently improve in Israel and in international operations, despite the significant negative impact of changes in foreign currency on shekel results, particularly in the business in Brazil. Our focus remains on innovation based growth, combined with continued investment in productivity across all operations.
In Israel, Strauss continues to outpace market growth for the eleventh successive quarter. In the reporting period the company increased its market share to 11.9% of the food and beverage sector. Revenue and market share growth were achieved, among other things, thanks to new product launches in all divisions.
We are posting an excellent quarter also in Strauss’s global operations, which account for around half of the Group’s business. The joint venture in Brazil continues to grow, with sales volumes increasing significantly. However, due to negative currency translations that detracted NIS 100 million, growth was not reflected in shekel revenues. The international dips and spreads business is also growing at an impressive rate, as is Strauss Water’s business in Israel and in other countries.”
Q3 2018 highlights(1)
- Organic sales growth, excluding foreign exchange effects, was c2.9%. Shekel sales were NIS c2.2 billion, similar to the corresponding period, and were impacted by negative currency translations amounting to NIS c108 million, mainly as a result of the depreciation of the BRL against the NIS compared to last year. It is noted that as at the publication date of the financial statements the BRL has appreciated against the NIS, regaining c7.3% in value versus the exchange rate at the end of the quarter.
- Gross profit was NIS c812 million (c37.6% of sales), up c0.3% compared to the corresponding period. Gross margins were up c1.0%.
- Operating profit (EBIT) was NIS c235 million (c10.9% of sales), up c6.1% compared to the corresponding period last year. EBIT margins were up c0.9%.
- EPS for shareholders of the Company was NIS c1.25, up c14.8% compared to the corresponding period.
- Positive cash flows from operating activities totaled NIS c248 million, compared to NIS c181 million in the corresponding period.
(1) Data represent the Company’s non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period, including adjustments required for deferral of profit or loss from commodity derivatives until the inventory is sold to external parties, and other income and expenses, net, unless stated otherwise.
First nine months 2018 highlights(1)
- Organic sales growth, excluding foreign exchange effects, was c5.6%. Shekel sales were NIS c6.4 billion compared to NIS 6.3 billion in the corresponding period in 2017; sales were impacted by negative currency translations amounting to NIS c210 million, mainly as a result of the depreciation of the BRL against the NIS compared to last year.
- Gross profit was NIS c2,458 million (c38.2% of sales), up c4.9% compared to the corresponding period last year. Gross margins were up c1.2%.
- Operating profit (EBIT) was NIS c696 million (c10.8% of sales), up c10.4% compared to the corresponding period last year. EBIT margins were up c0.8%.
- EPS for shareholders of the Company was NIS c3.50, up c15.0% compared to the corresponding period.
- Positive cash flows from operating activities totaled NIS c544 million, compared to NIS c294 million in the corresponding period.
(1) Data represent the Company’s non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period, including adjustments required for deferral of profit or loss from commodity derivatives until the inventory is sold to external parties, and other income and expenses, net, unless stated otherwise.
