TEL AVIV, Israel, May 28, 2012 /PRNewswire/ --
The Group Reports 16.5% Sales Growth and 9.1% Ebit(*) Growth, Alongside an Erosion of Gross and Operating Margins
Ofra Strauss, Chairperson of the Strauss Group, said today ( May 28, 2012): "The Strauss Group continues to invest in future growth engines, strengthen the company's competitive position and grow market shares, as streamlining processes, improvements and organizational adjustments to the company continue."
Gadi Lesin, President and Chief Executive Officer of the Strauss Group, said today: "In the first quarter of 2012 the group has posted 16.5% growth in sales and 9.1% growth in EBIT(*). At the same time, the group's gross and operating margins have eroded, due, among other things, to the rise in raw material prices compared to the corresponding period last year, and to the continuing increase in the prices of production inputs and energy, which are translated into annual incremental costs of tens of millions of shekels. Meanwhile, Strauss is further enhancing operational efficiency and deepening commercial activities in Israel. The group is presently preparing for the launch of activities in dips and spreads in Mexico and in an additional geographical region with PepsiCo, and for a consumer launch in Strauss Water U.K. with the Virgin Group which we announced in November 2011."Key data on the first quarter of 2012 (based on non-GAAP, based on management reports in NIS millions): In Q1'12, the group's sales totaled NIS 2,065 million compared to NIS 1,773 million in Q1'11, an increase of 16.5%; organic growth amounted to 15.6%. Growth is evident primarily in the activity of Strauss Coffee, which grew in Q1'12 by 26.1%, and in dips and spreads, which grew by 30.5%. Q1'12 gross profit grew by 7.4% and totaled NIS 731 million compared to NIS 680 million in the corresponding quarter last year; gross margins decreased from 38.4% in Q1'11 to 35.4% in Q1'12. The erosion of gross margins was driven primarily by Strauss Israel and Strauss Coffee, following the increase in the prices of raw materials and production inputs compared to the corresponding period last year. Q1'12 EBIT totaled NIS 168 million (8.1% of sales) compared to NIS 154 million (8.7% of sales) in Q1'11, an increase of 9.1%. The erosion of EBIT margins in the quarter was the result of the erosion of gross margins in Israel and in Coffee, as well as the incremental costs related to building Strauss Water's operations in China and in the U.K. and the expansion of the international dips and spreads operations to Mexico. Net income attributed to the shareholders of the company in the first quarter totaled NIS 65 million (3.2% of sales) compared to NIS 70 million last year (3.9% of sales), a decrease of 7.2%. The decrease in net income resulted from the increase in net financing expenses, and in tax expenses due to higher effective tax rate. (*) Based on non-GAAP management reports. Key data on the first quarter of 2012 (based on non-GAAP management reports in NIS millions):
First Quarter 2012 2011 % Chg Sales 2,065 1,773 16.5 Gross Income 731 680 7.4 % of sales 35.4% 38.4% Operating income - management accounting  168 154 9.1 % of sales 8.1% 8.7% Net income  65 70 (7.2) % of sales 3.2% 3.9%(1) Before other income (expenses)
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