Strauss recall had a mild affect on earnings: in Q2 revenues surged about 15% to NIS 2.3 bllion

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by Ifi Reporter Category:Law Aug 16, 2022

The Strauss Group published the financial statements for the first half and the second quarter of 2022. The company recorded an 18% increase in revenues in the first half of the year, which amounted to approximately 4.5 billion NIS.
In the second quarter, revenues amounted to approximately NIS 2.3 billion - an increase of approximately 14.6%. The growth is mainly due to an increase in sales of the coffee activity and was offset by a decrease in sales of the sweets division and the Sabra company, which operated partially during the half.

Despite the growth in sales, the company records a decrease in profit and operating profitability in the first half and second quarter of the year. The impact of the recall event in the sweets division and the adjustment plan at Sabra's factory, together with the increase in the prices of raw materials, transportation and energy in the world and in Israel, resulted in the operating profit of the group in the first half of the year amounting to approximately NIS 204 million - a decrease of approximately 59.1% and the profit to the shareholders decreased by about 66.2% to about NIS 113 million.
Ofra Strauss, Chairman of the Strauss Group: "I would like to thank Giora for the 5 years in which he served as CEO and led the group with extraordinary responsibility, determination, partnership and collegiality. Giora always knew how to put the people at the center, he was always aware of the day-to-day details and this while Maintaining a broad perspective and relentless striving to lead the group forward. During his tenure, which was characterized by many challenges including the corona virus, inflation, and more, Giura led significant processes that will affect Strauss for many years to come, among them, the design of the vision, the construction of a business strategy for the coming years and the resulting work plans."
She further added: "The same commitment and responsibility for the future, which characterized his leadership along the way, led him to the timely decision to pass the baton to the next CEO who will lead Strauss in the years to come. All of us at Strauss and I in particular express our great gratitude to him for more than 25 years of activity in the group. The Strauss Group Board of Directors works through a search committee to appoint a CEO for the group."
Giora Bar-Dea, CEO of the Strauss Group: "The first half of 2022 reflects the strength of the group by being global and diverse, which maintains and ensures its ability to successfully deal with a challenging macroeconomic environment alongside the internal challenges. In recent months, we have been dealing with two complex events: a recall in the candy division in Israel and adjustments at the Sabra plant in the US - these events negatively affect the group's results in this half."
Bar-Dea added: "Besides these, the coffee company and the water company both report excellent results, impressive growth in sales and an increase in profit. We conclude a quarter with high growth in revenue but a decrease in the profit line mainly due to the effect of the increase in the prices of raw materials and energy and the events in the sweets division and in Sobra. I know Closer to the strength and power of Strauss, its employees and managers, and I'm sure we're on the right track."
Strauss Israel ended the first half of the year with revenues of approximately 1.75 billion NIS and with a decrease of approximately 7.6%, which is mainly due to a decrease of approximately 30.8% in sales from the pleasure and enjoyment sector, which amounted to a total of approximately 407 million NIS during the half. Due to the recall event in the candy division.
The company carried out cleanings and investments in infrastructure, in order to ensure an improvement in the quality standard and food safety. The company is currently preparing for a gradual return to production under strict control and will announce this upon receiving approval from the Ministry of Health.
Also, sales of the health and lifestyle sector grew in the first half by about 2.9% and amounted to about 1.34 billion NIS mainly due to growth in sales of the dairy activity. Strauss Israel ended the half with an operating loss of about 26 million NIS.
Strauss Coffee enjoyed a particularly strong half. Coffee activity in Israel grew in the first half by approximately 6.1% to approximately NIS 395 million due to an increase in sales to the retail market and out-of-home sales. The coffee company's sales in Brazil jumped by about 162.4% in the first half to about NIS 1.26 billion, due to the increase in the quantity sold as well as due to price increases. Coffee activity in Eastern Europe also marks a successful half when sales in all countries grew at a double-digit rate1, despite the ongoing war between Russia and Ukraine.
The volume of the company's sales in the first half decreased by about 50.2% and amounted to about 151 million NIS (in 50% terms) and an operating loss of about 43 million NIS (in 50% terms) was recorded. Sabra's average financial market share in the hummus market in the first half of the year was about 33% (number 1 in the market). In addition, during the month of August, the increase in the plant's activity continued and the company estimates that it will return to full activity during the second half of 2022. Obella ended the first half with revenues of approximately NIS 41 million (in 50% terms), growth of approximately 2.5% 2.
Strauss Water continues its impressive growth journey in this half as well. The company's sales in Israel amounted to approximately 382 million shekels - a growth of approximately 7.4% resulting from an increase in the number of customers as well as from the sale of new devices. The activity in China, although it was affected, among other things, by the closures dictated due to the corona virus and which were in the country during the second quarter, it also grew and amounted to sales of NIS 351 million - an increase of 6.9%.

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