Strauss estimates: The recall of its products will reduce the profit by NIS 125-115 million

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by Ifi Reporter Category:Law May 12, 2022

Strauss estimates that the recall of its products from the plant in the Galilee landscape, which occurred on April 25, and the shutdown of the plant by order of the Ministry of Health, will reduce the company's net profit by NIS 125-115 million in the first quarter of 2022. Net profit of NIS 230-170 million.
The estimate for the first quarter is based on estimates that include a decrease in sales due to credits to the company's customers, costs of collecting products from chains and stores, an estimate of the extent of inventory destruction, compensation costs as determined by the company to consumers, additional ancillary costs, and tax effect.
The Company explains that in addition to the estimates in relation to the effects on the financial results in the first quarter, the estimates for 2022 include examinations regarding the costs of restoring the plant to full production capacity; Loss of profits in accordance with forecasts regarding the date of completion of the shutdown of the plant; And a return to production and sales based on various possible scenarios, additional ancillary costs, and given the Company's assessment of the existence of insurance coverage for some of the damages caused to the Company.
Strauss, which is managed by Giora Bar-Dea, notes that these are management assessments, and that the data have not yet been approved by the company's competent bodies; The set of data used in the preparation of the financial statements for the first quarter of 2022 has not yet been collected, and in any case has not yet been reviewed by the Company's auditors.
The company explains that although the recall occurred last April, and is apparently not relevant to the results of the first quarter of 2022, according to the accounting standard, the company must estimate the amounts to be recognized in its financial statements for the first quarter of 2022.
Strauss emphasizes that as of the date of the report, it cannot assess the future impact on the Company's market shares in the confectionery products. Strauss believes that the impact of the recall on its market shares in confectionery products depends, among other things, on the date of the plant's shutdown and its return to full operation, as well as on the indirect effects of the recall event on its results. Strauss notes that it cannot assess the consequences of legal proceedings in connection with the recall and shutdown of the plant, including legal proceedings that have already been filed.

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