The Strauss Group released its financial statements for the second quarter of 2019. The food maker showed a slight decrease in sales, but growth in net profit, thanks to an improvement in operating income along with a decrease in tax expenses.
The company, which is controlled by the Strauss family (57.4%), posted revenue of NIS 2.1 billion in the quarter - a decrease of 1.4% compared to the corresponding quarter in 2018, but after neutralizing the negative impact of exchange rate differences - revenues increased by 1.7%. Net profit attributable to shareholders showed growth of 9.5% to NIS 121 million, compared with NIS 112 million in the corresponding quarter last year. The improvement was achieved as a result of an increase in the company's operating profit, along with a decrease in tax expenses arising from a different profit mix between the various countries where Strauss operates.
The decline was mainly due to Strauss's coffee sector, due to the weakening of the Brazilian real exchange rate against the shekel; And the decline in green coffee prices. The negative factors were partly offset by the growth in sales in the Strauss Israel segment.
In the segmentation of operations, Strauss's water sector showed 6% growth in revenues and Strauss Israel's revenues increased by 3.3%. On the other hand, Strauss Coffee's revenue fell by 6.6% in the quarter, mainly as a result of the strengthening of the shekel - Israel's coffee sector grew by 4.5%, but international coffee activity declined by 8.8%. Excluding the effect of the exchange rate, revenues in the coffee sector fell by 1.4%.
The international dipping and spreading business grew by about 0.3%, but excluding the exchange rate effects showed growth of 6.8%. The company increased its market share in Israel, and at the end of the second quarter held a market share of 11.9% of the total food and beverage market in Israel, compared with 11.7% at the end of the second quarter of 2018.
Giora Bar Da'a, president and CEO of Strauss Group, said: "This quarter, too, Strauss was negatively impacted by the strengthening of the shekel against the currency basket, like other international Israeli companies. The main negative impact is on the income of the coffee company's operations abroad, while the rest of the group's activities: Strauss Israel, Sabra and the water company, enjoyed growth and continued improvement in profit and profitability. "
Towards the implementation of public health protection regulations on nutritional marking to take effect in January 2020, Strauss said it was "preparing to implement regulations to improve the nutritional values of its products. The company estimates that about 90% of its non-sweetened products will not be labeled with red patches." The purpose of the regulations is to make information available to consumers about the nutritional value of packaged foods, using symbols that inform whether the food contains a high amount of sodium, sugars or saturated fatty acids.