PETAH TIKVA, Israel, Aug. 13,
2019 /PRNewswire/ -- Giora
Bardea, President and CEO of Strauss Group (TASE: STRS):
"As an international group with operations in diverse categories
and numerous countries, we have delivered another quarter
of growth and improvement in earnings and profit margins in
most of the Group's businesses, in line with the trend of the past
three years. We note that in the second quarter, similar to other
international Israeli firms, Strauss was once again negatively
impacted by the appreciation of the shekel against foreign
currencies, with most of this effect applying to international
revenues of the coffee company. The Group's other businesses –
Strauss Israel, Sabra and Strauss Water – delivered growth and
continued improvement in earnings and profit margins."
Strauss Group posted sales of NIS 2.07
billion in the quarter, reflecting a drop of 1.4% compared
to the corresponding period; however, in organic terms and
excluding foreign currency effects, sales increased by 1.7%. As
mentioned, the difference is primarily due to the impact of softer
currencies in the coffee company's countries of operations.
In terms of earnings and profit margins Strauss Group has
delivered another strong quarter, with an increase in profit and
improved profit margins for the Group and the subsidiaries, mainly
thanks to continued innovation and long-term productivity
implementations. The Group's gross profit in the quarter was
approximately NIS 822 million,
accounting for 39.6% of sales, compared to a gross profit margin of
38.7% in the corresponding quarter last year and reflecting an
improvement of 1.1% in gross profit. The operating profit margin in
the quarter was 11% of sales and amounted to NIS 227 million, compared to NIS 207 million in earnings and an EBIT margin of
9.9% in the second quarter of 2018, reflecting an improvement of
9.4% in operating profit. On the bottom line, the Group concluded
the second quarter of 2019 with a net profit of NIS 121 million, an increase of 9.5% over the
corresponding period last year. The improvement in net profit is
the result of the increase in operating profit.
In the first half-year, the Group's revenue amounted to
NIS 4.18 billion, reflecting 0.8%
organic growth excluding foreign currency effects; gross profit was
NIS 1.67 billion – 39.9% of sales
compared to 38.5% of sales in the corresponding period. The EBIT in
the half-year was NIS 496 million,
11.9% of sales, reflecting an improvement of 7.4% compared to the
corresponding period last year. Strauss Group's net profit was
NIS 293 million, an improvement of
13.6% compared to the net profit in the first half of 2018.
Strauss Israel continued
the positive momentum, with sales rising by approximately 3.3% to
NIS 803 million. The company's
business in the second quarter was mainly influenced by continued
growth in the yogurt and milk beverage category under the Pro
brand, and by the start of distribution of Arla products (butter
and cheeses), continued growth of the bakery category, Energy
healthy snacks products and salty snacks led by Tapuchips. The Taam
Teva and Yad Mordechai brands also delivered strong growth.
Strauss Israel's gross profit
in the quarter was NIS 316 million –
39.3% of sales – compared to 38.6% in the corresponding period last
year. Operating profit rose from approximately NIS 69 million in the second quarter of 2018 to
NIS 80 million in the second quarter
of 2019, reflecting margins of 8.9% and 10%, respectively. The
improved margins were achieved mainly as a result of the sales mix,
which was based on new launches in numerous categories while
targeting different, and new, consumer publics, and the ramp-up of
productivity processes initiated several months ago, particularly
at the company's manufacturing sites, following investments in
technology and various operational enhancements.
According to StoreNext's[1] figures for the end
of June 2019, Strauss's aggregate
share of the Israeli food and beverage market was 11.9%, compared
to 11.7% in the corresponding period last year.
Strauss Coffee delivered sales growth in Israel and Brazil (in local currency) during the second quarter,
whereas the coffee company's business in Eastern Europe experienced a challenging
quarter. Sales
by the Três Corações joint venture in Brazil
[2] grew by 1.7% in local currency and amounted to NIS
470 million (the Group's share 50%), while significantly increasing
sales volumes and growing the company's market share from 27% in
the corresponding period to 28.4% in the second
quarter this year (according to A.C. Nielsen figures). Gross profit and profitability in local currency
also rose; however,
the 7.9% depreciation of the Brazilian currency eroded shekel income in the
quarter by 6.1% compared to the corresponding quarter.
The company's sales were also impacted by the drop in green
coffee prices in Brazil.
The coffee business in Eastern Europe posted a drop in sales, mainly as a result of the softer currencies in the region as well as
increased competition in those countries. In Israel, Strauss Coffee continued to grow,
mainly as a result of an increase in sales
volumes.
In total, the coffee business yielded revenue of approximately
NIS 913 million in the quarter – a
drop of 6.6% compared to the corresponding period last year.
Excluding foreign currency effect, the drop in revenue amounted to
1.3%.
Strauss Water delivered another strong quarter of
growth with NIS 159 million in sales,
an increase of 6% compared to the corresponding period. Strauss
Water's operating profit, which includes the Group's share of the
net profit of the joint venture with Haier Group in China, HSW, amounted to NIS 19 million, 11.9% of sales compared to 11.3%
in the corresponding period. The business in China delivered sales of approximately
NIS 141 million (100%) in the second
quarter, similar to sales in the corresponding period. Excluding
foreign currency effects, sales increased by 5.7% compared to the
corresponding period. HSW is presently active only in the POU
(point of use) segment, which consists of filters and purifiers
installed inside homes.
Given the joint venture's interest in expanding into additional
categories in the water business, including the point of entry
(POE) category (point of entry filtration and purification systems
treat the water as it enters the home by connecting directly to the
water line, improving water quality for general use and not only
for consumption), in the second quarter the HSW joint venture
entered into a distribution agreement for POE products manufactured
by a company owned by Haier Electronics (which holds 51% of the HSW
joint venture) and BWT.
These filtration and purification systems filter the water as it
enters the home by connecting directly to the water line and
provide an overall water purification solution for general home
use, and are designed for private homes and higher income
sectors of the population.
Sabra and Obela delivered 6.8% organic
growth in local currency during the quarter. Sales by Sabra, which
is active in the US and Canada,
amounted to approximately NIS 357
million (100%) in the quarter, similar to the corresponding
period last year. Sabra is the largest refrigerated dips and
spreads manufacturer in the US. According to IRI, Sabra's value
market share of the hummus market in the 24 weeks ended
June 30, 2019 was 61.6%, compared to
59.9% in the corresponding period last year.
Sabra's operating profit rose 49.7% to NIS 60 million, constituting 16.7% of sales in
the second quarter. Sales by Obela, which is active in Mexico, Australia, New
Zealand and Western Europe,
amounted to approximately NIS 38
million in the quarter, similar to the corresponding period;
however, excluding foreign currency effects, growth was 7.7%
|
Non GAAP Figures
(1)
|
|
Second
Quarter
|
|
2019
|
2018
|
Change
|
Total Group Sales
(NIS mm)
|
2,073
|
2,103
|
-1.4%
|
Organic Sales Growth
excluding FX
|
|
|
1.7%
|
Gross Profit (NIS
mm)
|
822
|
813
|
1.1%
|
Gross Margins
(%)
|
39.6%
|
38.7%
|
+90 bps
|
EBITDA (NIS
mm)
|
309
|
264
|
16.9%
|
EBITDA Margins
(%)
|
14.9%
|
12.6%
|
+230 bps
|
EBIT (NIS
mm)
|
227
|
207
|
9.4%
|
EBIT Margins
(%)
|
11.0%
|
9.9%
|
+110 bps
|
Net Income
Attributable to the Company's
Shareholders (NIS mm)
|
121
|
112
|
9.5%
|
Net Income Margin
Attributable to the
Company's Shareholders (%)
|
5.9%
|
5.3%
|
+60 bps
|
EPS (NIS)
|
1.06
|
0.97
|
8.8%
|
Operating Cash Flow
(NIS mm)
|
304
|
179
|
69.8%
|
Capex (NIS mm)
(2)
|
-92
|
-66
|
39.4%
|
Net debt (NIS
mm)
|
2,388
|
2,281
|
4.7%
|
Net debt / annual
EBITDA
|
1.9x
|
2.1x
|
(0.2x)
|
|
|
|
|
1) The data in this document are based on 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, mark-to-market as at
end-of-period of open positions in the Group in respect of
financial derivatives used to hedge commodity prices and all
adjustments necessary to delay recognition of gains and losses
arising from commodity derivatives until the date when the
inventory is sold to outside parties, other income and expenses,
net, and the tax effect of excluding those items, unless stated
otherwise.
2) Investments include the acquisition of fixed assets and
investment in intangible assets.
* Reclassified. For further information, see Note 1.3 to the
Condensed Consolidated Interim Financial Statements as at
June 30, 2019.
** EBITDA for the 12 months ended June
30, 2019 was adjusted to reflect the effects of IFRS 16,
Leases.
Note: Financial data were rounded to NIS millions.
Percentages changes were calculated on the basis of the exact
figures in NIS thousands.
Non GAAP Figures
(1)
|
|
|
|
|
|
|
|
|
|
|
Second
Quarter
|
|
Sales
(NIS mm)
|
Sales
Growth
vs. Last Year
|
Organic
Sales
Growth excluding
FX
|
EBIT (NIS
mm)
|
NIS
Change in EBIT
|
% Change
in EBIT
|
EBIT
margins
|
Change in
EBIT
margins vs.
2018
|
Sales and EBIT by
Operating
Segments and Activities
|
|
|
|
|
|
|
|
|
Strauss
Israel:
|
|
|
|
|
|
|
|
|
Health &
Wellness
|
561
|
4.7%
|
4.7%
|
64
|
8
|
14.1%
|
11.3%
|
+90 bps
|
Fun & Indulgence
(2)
|
242
|
0.1%
|
0.1%
|
16
|
3
|
20.1%
|
7.0%
|
+120 bps
|
Total Strauss
Israel
|
803
|
3.3%
|
3.3%
|
80
|
11
|
15.4%
|
10.0%
|
+110
bps
|
|
|
|
|
|
|
|
|
|
Strauss
Coffee:
|
|
|
|
|
|
|
|
|
Israel
Coffee
|
165
|
4.5%
|
4.5%
|
28
|
10
|
54.2%
|
17.1%
|
+550 bps
|
International Coffee
(2)
|
748
|
-8.8%
|
-2.5%
|
71
|
-18
|
-20.4%
|
9.5%
|
-140
bps
|
Total Strauss
Coffee
|
913
|
-6.6%
|
-1.4%
|
99
|
-8
|
-7.6%
|
10.9%
|
-10
bps
|
|
|
|
|
|
|
|
|
|
International Dips
& Spreads:
|
|
|
|
|
|
|
|
|
Sabra (50%)
(2)
|
179
|
0.2%
|
6.7%
|
30
|
10
|
49.7%
|
16.7%
|
+550 bps
|
Obela (50%)
(2)
|
19
|
1.5%
|
7.7%
|
-3
|
-1
|
-82.5%
|
NM
|
NM
|
Total
International Dips & Spreads
|
198
|
0.3%
|
6.8%
|
27
|
9
|
46.5%
|
13.5%
|
+420
bps
|
|
|
|
|
|
|
|
|
|
Strauss
Water(2)
|
159
|
6.0%
|
6.2%
|
19
|
2
|
12.2%
|
11.9%
|
+60
bps
|
Other
|
0
|
NM
|
NM
|
2
|
6
|
143.5%
|
NM
|
NM
|
Total
Group
|
2,073
|
-1.4%
|
1.7%
|
227
|
20
|
9.4%
|
11.0%
|
+110
bps
|
(1) The data in this document are based on 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, mark-to-market as at
end-of-period of open positions in the Group in respect of
financial derivatives used to hedge commodity prices and all
adjustments necessary to delay recognition of gains and losses
arising from commodity derivatives until the date when the
inventory is sold to outside parties, other income and expenses,
net, and the tax effect of excluding those items, unless stated
otherwise.
(2) Fun & Indulgence figures include Strauss's 50%
share in the salty snacks business. 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%).
International Dips & Spreads figures reflect Strauss's 50%
share in Sabra and Obela. Strauss Water EBIT figures include
Strauss's share in the joint venture in China, Haier Strauss Water (HSW) (49%).
Note: Financial data were rounded to NIS millions.
Percentages changes were calculated on the basis of the exact
figures in NIS thousands. Total figures for International Dips
& Spreads were calculated on the basis of the exact figures for
Sabra and Obela in NIS thousands.
|
Non GAAP Figures
(1)
|
|
First
Half
|
|
2019
|
2018
|
Change
|
Total Group Sales
(NIS mm)
|
4,179
|
4,270
|
-2.1%
|
Organic Sales Growth
excluding FX
|
|
|
0.8%
|
Gross Profit (NIS
mm)
|
1,667
|
1,646
|
1.2%
|
Gross Margins
(%)
|
39.9%
|
38.5%
|
+140 bps
|
EBITDA (NIS
mm)
|
658
|
575
|
14.3%
|
EBITDA Margins
(%)
|
15.8%
|
13.5%
|
+230 bps
|
EBIT (NIS
mm)
|
496
|
461
|
7.4%
|
EBIT Margins
(%)
|
11.9%
|
10.8%
|
+110 bps
|
Net Income
Attributable to the Company's
Shareholders (NIS mm)
|
293
|
258
|
13.6%
|
Net Income Margin
Attributable to the
Company's Shareholders (%)
|
7.0%
|
6.0%
|
+100 bps
|
EPS (NIS)
|
2.54
|
2.25
|
13.1%
|
Operating Cash Flow
(NIS mm)
|
355
|
267
|
33.0%
|
Capex (NIS mm)
(2)
|
-160
|
-132
|
21.2%
|
Net debt (NIS
mm)
|
2,388
|
2,281
|
4.7%
|
Net debt / annual
EBITDA
|
1.9x
|
2.1x
|
(0.2x)
|
|
|
|
|
1) The data in this document are based on 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, mark-to-market as at
end-of-period of open positions in the Group in respect of
financial derivatives used to hedge commodity prices and all
adjustments necessary to delay recognition of gains and losses
arising from commodity derivatives until the date when the
inventory is sold to outside parties, other income and expenses,
net, and the tax effect of excluding those items, unless stated
otherwise.
2) Investments include the acquisition of fixed assets and
investment in intangible assets.
* Reclassified. For further information, see Note 1.3 to the
Condensed Consolidated Interim Financial Statements as at
June 30, 2019.
** EBITDA for the 12 months ended June
30, 2019 was adjusted to reflect the effects of IFRS 16,
Leases.
Note: Financial data were rounded to NIS millions.
Percentages changes were calculated on the basis of the exact
figures in NIS thousands.
Non GAAP Figures
(1)
|
|
|
|
|
|
|
|
|
|
|
First
Half
|
|
Sales (NIS
mm)
|
Sales
Growth vs. Last Year
|
Organic
Sales
Growth excluding
FX
|
EBIT (NIS
mm)
|
NIS
Change in EBIT
|
% Change
in EBIT
|
EBIT
margins
|
Change in
EBIT
margins vs. 2018
|
Sales and EBIT by
Operating Segments and Activities
|
|
|
|
|
|
|
|
|
Strauss
Israel:
|
|
|
|
|
|
|
|
|
Health &
Wellness
|
1,099
|
3.0%
|
3.0%
|
119
|
9
|
8.0%
|
10.8%
|
+50 bps
|
Fun & Indulgence
(2)
|
581
|
0.8%
|
0.8%
|
73
|
5
|
6.2%
|
12.6%
|
+60 bps
|
Total Strauss
Israel
|
1,680
|
2.2%
|
2.2%
|
192
|
14
|
7.3%
|
11.4%
|
+50
bps
|
|
|
|
|
|
|
|
|
|
Strauss
Coffee:
|
|
|
|
|
|
|
|
|
Coffee
Israel
|
387
|
3.3%
|
3.3%
|
86
|
27
|
44.2%
|
22.2%
|
+630 bps
|
International Coffee
(2)
|
1,420
|
-10.7%
|
-3.9%
|
125
|
-42
|
-24.8%
|
8.8%
|
-170
bps
|
Total Strauss
Coffee
|
1,807
|
-8.0%
|
-2.5%
|
211
|
-15
|
-6.6%
|
11.7%
|
+20
bps
|
|
|
|
|
|
|
|
|
|
International Dips
& Spreads:
|
|
|
|
|
|
|
|
|
Sabra (50%)
(2)
|
349
|
2.9%
|
6.6%
|
57
|
23
|
66.8%
|
16.4%
|
+630 bps
|
Obela (50%)
(2)
|
41
|
6.8%
|
12.0%
|
-5
|
-1
|
-19.5%
|
NM
|
NM
|
Total
International Dips & Spreads
|
390
|
3.3%
|
7.1%
|
52
|
23
|
74.1%
|
13.2%
|
+530
bps
|
|
|
|
|
|
|
|
|
|
Strauss
Water(2)
|
302
|
6.0%
|
6.1%
|
35
|
8
|
32.5%
|
11.7%
|
+230
bps
|
Other
|
0
|
NM
|
NM
|
6
|
5
|
589.2%
|
NM
|
NM
|
Total
Group
|
4,179
|
-2.1%
|
0.8%
|
496
|
35
|
7.4%
|
11.9%
|
+110
bps
|
|
|
|
|
|
|
|
|
|
1) The data in this document are based on 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,
mark-to-market as at end-of-period of open positions in the Group
in respect of financial derivatives used to hedge commodity prices
and all adjustments necessary to delay recognition of gains and
losses arising from commodity derivatives until the date when the
inventory is sold to outside parties, other income and expenses,
net, and the tax effect of excluding those items, unless stated
otherwise.
2) Fun & Indulgence figures include Strauss's 50%
share in the salty snacks business. 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%).
International Dips & Spreads figures reflect Strauss's 50%
share in Sabra and Obela. Strauss Water EBIT figures include
Strauss's share in the joint venture in China, Haier Strauss Water (HSW) (49%).
Note: Financial data were rounded to NIS millions.
Percentages changes were calculated on the basis of the exact
figures in NIS thousands. Total figures for International Dips
& Spreads were calculated on the basis of the exact figures for
Sabra and Obela in NIS thousands.
Condensed
financial accounting (GAAP)
|
Second
Quarter
|
|
2019
|
2018
|
Change
|
Sales
|
1,338
|
1,348
|
-0.8%
|
Cost of sales
excluding impact of commodity hedges
|
793
|
808
|
-1.9%
|
Adjustments for
commodity hedges
|
-13
|
-2
|
|
Cost of
sales
|
780
|
806
|
-3.1%
|
Gross
profit
|
558
|
542
|
2.8%
|
% of sales
|
41.7%
|
40.2%
|
|
Selling and marketing
expenses
|
322
|
325
|
-0.7%
|
General and
administrative expenses
|
99
|
103
|
-3.7%
|
Total
expenses
|
421
|
428
|
|
Share of profit of
equity-accounted investees
|
85
|
76
|
13.3%
|
Operating profit
before other expenses
|
222
|
190
|
16.4%
|
% of sales
|
16.5%
|
14.1%
|
|
Other income
(expenses), net
|
-2
|
0
|
|
Operating profit
after other expenses
|
220
|
190
|
15.2%
|
Financing expenses,
net
|
-38
|
-22
|
71.8%
|
Income before
taxes on income
|
182
|
168
|
7.8%
|
Taxes on
income
|
-41
|
-46
|
-12.8%
|
Effective tax
rate
|
22.5%
|
27.8%
|
|
Income for the
period
|
141
|
122
|
15.8%
|
Attributable to
the Company's shareholders
|
127
|
110
|
15.4%
|
Attributable to
non-controlling interests
|
14
|
12
|
19.4%
|
|
|
|
|
Condensed
financial accounting (GAAP)
|
First
Half
|
|
2019
|
2018
|
Change
|
Sales
|
2,768
|
2,794
|
-0.9%
|
Cost of sales
excluding impact of commodity hedges
|
1,623
|
1,664
|
-2.4%
|
Adjustments for
commodity hedges
|
0
|
-13
|
|
Cost of
sales
|
1,623
|
1,651
|
-1.6%
|
Gross
profit
|
1,145
|
1,143
|
0.1%
|
% of sales
|
41.4%
|
40.9%
|
|
Selling and marketing
expenses
|
636
|
640
|
-0.7%
|
General and
administrative expenses
|
198
|
198
|
-0.1%
|
Total
expenses
|
834
|
838
|
|
Share of profit of
equity-accounted investees
|
153
|
134
|
14.5%
|
Operating profit
before other expenses
|
464
|
439
|
5.7%
|
% of sales
|
16.7%
|
15.7%
|
|
Other income
(expenses), net
|
-3
|
2
|
|
Operating profit
after other expenses
|
461
|
441
|
4.5%
|
Financing expenses,
net
|
-65
|
-38
|
70.0%
|
Income before
taxes on income
|
396
|
403
|
-1.6%
|
Taxes on
income
|
-87
|
-113
|
-23.1%
|
Effective tax
rate
|
22.0%
|
28.1%
|
|
Income for the
period
|
309
|
290
|
6.8%
|
Attributable to
the Company's shareholders
|
283
|
263
|
7.6%
|
Attributable to
non-controlling interests
|
26
|
27
|
-0.8%
|
|
|
|
|
Note:Financial data were rounded to NIS millions.
Percentages changes were calculated on the basis of the exact
figures in NIS thousands.
Investor Conference Calls
Strauss Group will host an investor conference in Hebrew on
Tuesday, August 13, 2019 at
14:00 (Israel time) to review the Financial
Statements of the Company for the second quarter of 2019.
Investors can listen to the conference in Hebrew by dialing
03-918-0609.
Strauss Group will also host an investor conference call in
English on Tuesday, August 13, 2019
at 15:30 Israel time
(13:30 UK, 08:30 EST) to
review the Financial Statements of the Company for the second
quarter of 2019.
To participate in the conference in English, please call one of
the following numbers as appropriate:
From the UK: 0-800-917-5108
From the US: 1-888-668-9141
From Israel: 03-918-0610
The Financial Statements for the second quarter of 2019 and
Investors Presentation are posted on the Group's Investor Relations
website at:
http://ir.strauss-group.com/phoenix.zhtml?c=92539&p=irol-irhome
[1] StoreNext is engaged in the measurement of
the fast-moving consumer goods (FMCG) segment in the barcoded
retail market (hereinafter: "StoreNext").
[2] Três Corações (3C) – The
Três Corações joint venture in Brazil – a company jointly held by the Group
(50%) and by a local holding company, São Miguel Holding e Investimentos S.A. (50%).
(Data reflect Strauss Coffee's share (50%) unless expressly stated
otherwise).
For further information please contact:
Osnat
Golan
VP Communications,
Digital & Sustainability
Strauss Group
Ltd.
972-52-828-8111
972-3-675-2281
Osnat.Golan@Strauss-Group.com
|
Daniella
Finn
Director of Investor
Relations
Strauss Group
Ltd.
972-54-577-2195
972-3-675-2545
Daniella.Finn@Strauss-Group.com
|
|
Or
|
|
Shlomi
Sheffer
External
Communications Director
Strauss Group
Ltd.
972-50-620-8000
972-3-675-6713
Shlomi.Sheffer@Strauss-Group.com
|
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content:http://www.prnewswire.com/news-releases/strauss-group-announces-results-for-the-second-quarter-of-2019-with-stable-sales-as-earnings-and-profit-margins-rise-significantly-300900551.html
SOURCE Strauss Group Ltd.