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G. Willi-Food Reports Q3 2011 Sales Up 7% Over Q3 2010 Sales

Stocks in this article: WILC

YAVNE, Israel, November 28, 2011 /PRNewswire/ --

G. Willi-Food International Ltd. (NASDAQ: WILC) (the " Company" or " Willi-Food"), a global company specializing in the development, manufacturing, marketing and international distribution of kosher foods, today announced its unaudited financial results for the third quarter and the nine-months ended September 30, 2011.

Third Quarter Fiscal 2011 Highlights

  • Sales increased 7.1% over third quarter of 2010 to NIS 85.3 million ( US$ 23.0 million)
  • Gross profit decreased 14.7% over third quarter of 2010 to NIS 21.0 million ( US$ 5.7 million), or 24.7% of sales
  • Operating income decreased 51.7% over third quarter of 2010 to NIS 4.0 million ( US$ 1.1 million), or 4.7% of sales
  • Net income decreased 71.2% over third quarter of 2010 to NIS 2.26 million ( US$ 0.6 million), or 2.6% of sales
  • Net income attributed to the owners of the Company decreased 67.6% over third quarter of 2010 to NIS 2.35 million ( US$ 0.63 million), or 2.7% of sales
  • Cash and securities balance of NIS 194.2 million ( US$ 52.3 million) as of September 30, 2011

Willi-Food's operating divisions include Willi-Food, a distributor of a broad variety of kosher foods, its wholly-owned Gold Frost - a designer, developer and distributor of branded kosher dairy food products, and Shamir Salads - an Israeli distributor and manufacturer of Mediterranean style salads.  

Third Quarter Fiscal 2011 Summary

Sales for the third quarter of 2011 increased by 7.1% to NIS 85.3 million ( US$ 23.0 million) compared to sales of NIS 79.7 million ( US$ 21.5 million) in the third quarter of 2010. The growth in sales in the third quarter was primarily due to increased awareness to the Company's new products following intensified sales activities that the Company initiated during 2011.

Gross profit for the third quarter of 2011 decreased by 14.7% to NIS 21.0 million ( US$ 5.7 million) compared to gross profit of NIS 24.7 million ( US$ 6.6 million) in the third quarter of 2010.  Third quarter gross margin was 24.7% compared to gross margin of 30.9% for the same period in 2010. The decrease in gross profit and gross margins was primarily due to the reductions in the prices of certain of our products as a result of continued pressure from our customers to reduce prices as a result of national protests against the cost of food products, due to an increase in global prices of food products compounded by the recent strengthening of the U.S. dollar versus the NIS (a depreciation of  8.7% of the value of the NIS in the third quarter of 2011) and due to the general effects of the global economic recession. The Company expects a further decline in its gross margins in the fourth quarter of 2011 and in the first quarter of 2012. To the extent that customer pressure to reduce prices continues, or that global prices of food products continue to increase, or that the depreciation of the NIS versus the U.S. dollar continues, the Company's gross margins may be impacted beyond the first quarter of 2012.

Mr. Zwi Williger, Chairman of Willi-Food commented, "Third quarter results were affected by the national protest against the cost of food products which led our customers to reduce the selling prices of food products, pressuring us to decrease our selling prices to them. This quarter was also affected by the increase in global purchase prices, the depreciation of the NIS versus the U.S. dollar, an environment of continued uncertainty in the global financial markets, and a recession that is seen both in our home market and abroad. We believe that Willi-Food's results in the fourth quarter of 2011 and in 2012 will be affected by the economic situation and significant recession that has affected our customers and the global markets."  

Willi-Food's operating income for the third quarter of 2011 decreased 51.7% to NIS 4.0 million ( US$ 1.1 million) over the third quarter of 2010. Selling expenses increased by 4.2% from the comparable quarter of 2010. Selling expenses as a percentage of sales decreased in the third quarter of 2011 to 13.1% compared to 13.4% in the third quarter of 2010. General and administrative expenses decreased by 13.8% from the comparable quarter of 2010. General and administrative expenses as a percentage of sales decreased in the third quarter of 2011 to 5.7% from 7.1% in the third quarter of 2010. Most of the other expenses that were recorded in the third quarter of 2011 are a one-time expense resulting from an impairment charge in the amount of NIS 1.1 million ( $0.3 million) on intangible assets in Shamir Salads.

Willi-Food's income before taxes for the third quarter of 2011 decreased 67.2% to NIS 3.3 million ( US$ 0.9 million) over the third quarter of 2010. Willi-Food's net income in the third quarter of 2011 decreased 71.2% to NIS 2.3 million ( US$ 0.6 million) from NIS 7.8 million ( US$ 2.1 million) recorded in the third quarter of 2010. Willi-Food's net income attributed to the owners of the Company in the third quarter of 2011 decreased 67.6% to NIS 2.3 million ( US$ 0.6 million), or NIS 0.17 (US$ 0.05) per share, compared to NIS 7.2 million ( US$ 2.0 million), or NIS 0.53 (US$ 0.14) per share, recorded in the third quarter of 2010.

Willi-Food generated NIS 9.6 million ( US$ 2.6 million), or NIS 0.71 (US$ 0.19) per share from continuing operating activities in the third quarter of 2011.

Willi-Food ended the third quarter of 2011 with NIS 194.2 million ( US$ 52.3 million) in cash and securities and NIS 3.3 million ( US$ 0.9 million) in short-term debt (51% of the debt of Shamir Salads). Willi-Food's shareholders' equity at the end of September 2011 was NIS 322.5 million ( US$ 86.9 million).

Nine-Month Results

Willi-Food's sales for the nine-month period ending September 30, 2011 increased by 2.9% to NIS 264.7 million ( US$ 71.3 million) compared to sales of NIS 257.3 million ( US$ 69.3 million) in the first nine-months of 2010. Gross profit for the period decreased 6.0% to NIS 70.9 million ( US$19.1 million) compared to gross profit of NIS 75.4 million ( US$ 20.3 million) for the nine-month period in 2010. First nine-month gross margins in 2011 were 26.8% compared to gross margins of 29.3% in the same period of 2010.

Operating income for the first nine months of 2011 decreased by 7.7% to NIS 22.5 million ( US$ 6.1 million) from NIS 25.6 million ( US$ 6.9 million) reported in the comparable period of last year. First nine-month of 2011 income before taxes decreased by 25.6% to NIS 20.8 million ( US$ 5.6 million) compared to NIS 28.0 million ( US$ 7.5 million) recorded in the first nine months of 2010. Net income for the first nine months of 2011 decreased by 28.7% to NIS 15.7 million ( US$ 4.2 million) from NIS 22.1  million (US $5.9 million) in the first nine months of 2010. Net income attributable to the owners of the Company for the first nine months of 2011 decreased by 25.9% to NIS 15.4 million (US $4.1 million), or NIS 1.13 (US$ 0.30) per share compared to net income attributable to the owners of the Company for the first nine months of 2010 of NIS 20.7 million ( US$ 5.6 million), or NIS 1.64 (US$ 0.44) per share.

Business Outlook

Mr. Williger commented, "Looking forward, we are facing a significant increase in the level of uncertainty in the global economy. In Israel, economic uncertainty is coupled with changes in the Israeli market that we expect will negatively affect our results in the remainder of 2011 and the beginning of 2012. On the other hand, our top line growth reflected the synergies we have created to channel the broad range of products coming from our own sourcing and that of our subsidiaries. We expect this growth to cease in the remainder of 2011 due to the global and Israeli economic situations, which we expect will affect our customer base, both in the retail and wholesale markets, in Israel and abroad. We therefore expect net income for the fourth quarter of 2011 and the first quarter of 2012 to be significantly lower compared to comparable prior quarters. Nevertheless, this period of economic uncertainty presents an opportunity for Willi-Food to utilize its cash on hand to purchase synergetic companies at lower prices than before. We continue looking for opportunities to create additional value for our shareholders."

Mr. Williger concluded, "In light of the anticipated continued recession, our foreseeable challenges ahead will be to manage our expenses, and in particular the cost of our products, to an acceptable degree in order to accommodate our consumers' continued anticipated desire to acquire lower cost products. We hope that in these difficult times we will be able to maintain our customer base both in the retail and wholesale markets."  

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