Corona crisis led to a sharp increase in Strauss's sales and revenues in Q1 totaled NIS 2.2 billion

The Corona crisis led to a sharp increase in Strauss's sales but contributed to erosion of its profitability in the first quarter of 2020. The company earned NIS 171 million in the last quarter - down 0.3% on its corresponding quarter in 2019.
The company's management report consolidates - in contrast to accounting rules - Strauss's relative share of the financial results of companies it holds only 50% of its shares, and does not control them like Strauss Frito Lei, which produces savory snacks, Sabra that produces chickpeas and tres Coracoes Brazil's largest coffee company, with Strauss's revenue up 3.0% in the first quarter of 2020 compared to its corresponding in 2019, totaling NIS 2.2 billion.
The increase was due to 12% growth in Strauss Israel's sales following the Corona period, which contributed NIS 106 million to sales, a 5% increase in sales in the coffee division, which contributed NIS 40 million to sales, and a 7.9% increase in dips and spreads, which added NIS 15 million to sales growth.
Sales growth as a result of the Corona crisis was partially offset by the strengthening of the shekel against all currencies, with the exception of the Ukrainian hryvnia, which derailed NIS 100 million from sales, mainly as a result of the 19% devaluation of the Brazilian real exchange rate against the shekel.
Strauss notes that sales in Israel jumped 23% in March, but grew 12% in the full quarter. Strauss coffee sales grew 8.9% in terms of source currencies (mainly the real and ruble) in March, but grew 5.0% in the entire quarter and Sabra's international dips and spreads grew 33% in local currencies. Strauss Water's sales fell 7% in March as a result of the impact of the Corona crisis on Tammy 4 activity during the crisis, growing 0.5% in the entire quarter.
Strauss's gross operating profit grew by 3.9% in the first quarter of 2020 compared with the same in 2019 and amounted to NIS 878 million - 40.5% of turnover compared to 40.1% of turnover in 2019. The increase in gross profit and profitability is due to a quantitative increase in Strauss Israel's sales as a result of the decline in the price of green coffee - the raw material for coffee production - partially offset by a change in the sales mix.
Strauss's operating profit decreased by 0.5% in the first quarter of 2020 compared with the corresponding period in 2019 and amounted to NIS 268 million, which is 12.3% of turnover in the first quarter of 2020, compared to 12.8% in the same period in 2019. The decline in operating profit is due to the strengthening of the shekel against the other currencies, which subtracted NIS 8 million from operating profit, a decrease of NIS 6 million in operating profit of international dipping operations and spreads, partly due to Sabra's announcement of a Super Bowl and a decrease of NIS million in water activity as a result of a fall in sales of the HSW venture. In China due to the Corona crisis, which was offset by growth in Strauss Israel's operating profit, which contributed NIS 12 million to operating profit and NIS 2 million in operating profit of coffee operations.
Sales of Tres Coracoes, Strauss Coffee Company in Brazil (50%) grew 3% in the first quarter of 2020 compared to the corresponding in 2019 and amounted to Real 877 million as a result of sales growth and market share increase to 28.2% of the market compared to 28.1 % Concurrent in 2019. Tres Coracoes' gross profit grew 5% in the first quarter of 2020 compared to its equivalent in 2019 and amounted to real 255 million - 29% of turnover compared to 28.7% of turnover in 2019.
Tres Coracoes' operating profit decreased 25% in the first quarter of 2020 compared to the corresponding in 2019 and amounted to 48 million real, which is 19% of turnover compared to 26% of turnover in 2019. The fall in profit and operating profit is due to salary increases and costs associated with the Corona crisis offset by an improvement in the operating profitability of TRES coffee capsules.