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The Strauss Group Today Announces Results For Second Quarter 2012

Stocks in this article: STRS

TEL AVIV, Israel, August 22, 2012 /PRNewswire/ --

THE GROUP REPORTS 5.2% SALES GROWTH, IMPROVEMENT IN INTERNATIONAL COFFEE BUSINESS RESULTS AND STRONG OPERATING RESULTS IN SABRA. THE GROUP'S NON-GAAP OPERATING PROFIT TOTALED NIS 125 MILLION, SIMILAR TO THE CORRESPONDING QUARTER LAST YEAR

Ofra Strauss, Chairperson of the Strauss Group  (TASE: STRS.TA) , said today: "The Strauss Group continues to implement its work plans while making adjustments for the economic challenges in the various markets where it is active. The Group is reaping the fruits of its investment in Sabra, while continuing to invest in innovation in all areas of its activity, in cutting edge technology and in future growth drivers."

Gadi Lesin, President and Chief Executive Officer of the Strauss Group, said today: "The Strauss Group continues to grow, posting an increase of 5.2% in sales in the second quarter and crossing the four billion shekel mark in sales in the first half. The Group has maintained its operating profit despite further increases in production inputs, a weakening of the currencies in relation to the dollar and challenges in Israel, mainly thanks to the improvement in profit in activities outside of Israel, strict control of expenses and streamlining measures applied to general and administrative expenses.

"In this quarter Strauss, together with a PepsiCo subsidiary, launched the jointly-held global dips and spreads company (Obela), and the company's first product line was launched in Mexico. Strauss Water launched the partnership in England with the Virgin Group, and several days ago the investment in Virgin Strauss Water by funds that are part of the Virgin Group was completed."

Key data on the second quarter [1] and as at June 30, 2012

  • Sales totaled NIS 1.9 billion ( NIS 1.8 billion last year), an increase of 5.2%; organic sales excluding the effect of changes in exchange rates grew by 6.5%.
  • Gross profit totaled NIS 665 million (34.3% of sales) compared to NIS 649 million last year (35.2% of sales), an increase of 2.5%.
  • Operating profit totaled approximately NIS 125 million (6.4% of sales) compared to NIS 125 million last year (6.8% of sales), an increase of 0.5%.
  • The non-GAAP operating profit in the second quarter was positively influenced by the increase in the non-GAAP operating profit in the International Coffee segment (positive contribution of NIS 9 million) and by the growth in Sabra's operating profit (positive contribution of NIS 9 million). However, these were offset by operating expenses related to building the International Dips and Spreads business (Obela) outside of North America (negative contribution of NIS 5 million), by an increase in the operating loss of the "Other" segment (negative contribution of NIS 4 million), mainly as a result of the increase in operating expenses related to building the activity of Strauss Water in China and England, by a decrease in the results of the Health & Wellness segment (negative contribution of NIS 3 million), a decrease in the Fun & Indulgence segment (negative contribution of NIS 2 million), and a decrease in the operating profit of the Israel Coffee segment (negative contribution of NIS 3 million).
  • Net income attributed to the Company's shareholders totaled NIS 35 million compared to NIS 39 million last year, a decrease of 10.0%.
  • Cash flows from operating activities totaled NIS 256 million compared to a negative cash flow of NIS 24 million last year.
  • The net debt as at June 30, 2012 totaled NIS 1,671 million (compared to NIS 1,463 million on December 31, 2011 and NIS 1,746 million on March 31, 2012).

Key data on the first half [ 1 ]

  • Sales totaled NIS 4.0 billion ( NIS 3.6 billion last year), an increase of 10.7%; organic sales excluding the effect of changes in exchange rates grew by 11.0%.
  • Gross profit totaled NIS 1.4 billion (35.3% of sales) compared to NIS 1.3 billion last year (36.4% of sales), an increase of 5.1%.
  • Operating profit totaled approximately NIS 293 million (7.3% of sales) compared to NIS 279 million last year (7.7% of sales), an increase of 5.2%.
  • The growth in the non-GAAP operating profit was mainly due to the operating profit of Strauss Coffee (positive contribution of NIS 16 million), an increase in operating profit in Sabra (positive contribution of NIS 11 million), and growth in the activity of the Fun & Indulgence segment (positive contribution of NIS 5 million). However, this growth was offset by the expenses of building the International Dips and Spreads business (Obela) outside of North America (negative contribution of NIS 9 million), a decrease in the results of the Health & Wellness segment (negative contribution of NIS 8 million), and by an increase in the operating loss of the "Other" segment (negative contribution of NIS 3 million), mainly as a result of the increase in operating expenses related to building the activity of Strauss Water in China and England.
  • Net income attributed to the Company's shareholders totaled NIS 100 million compared to NIS 109 million last year, a decrease of 8.2%.
  • Cash flows from operating activities totaled NIS 241 million compared to a negative cash flow of NIS 76 million in the corresponding period last year.

Key data on the first half and second quarter (based on non-GAAP management reports, in   NIS millions) [ 1 ] :

                                           First Half       Second Quarter
                                         2012  2011 % Chg  2012  2011  % Chg
    Sales                               4,001 3,614  10.7 1,936 1,841    5.2
    Gross profit - non-GAAP management
    reports                             1,396 1,329   5.1   665   649    2.5
    % of sales                          34.9% 36.8%       34.3% 35.2%
    Operating profit - non-GAAP
    management reports                    293   279   5.2   125   125    0.5
    % of sales                           7.3%  7.7%        6.4%  6.8%
    Income for the period - non-GAAP
    management reports                    142   151 (6.3)    58    58  (0.3)
    Attributable to:
 
    The Company's shareholders            100   109 (8.2)    35    39 (10.0)

The Group's Activity in Israel

The Strauss Group is the second-largest company in the Israeli food market and in the first half of 2012, according to StoreNext, held 12.2% of the total domestic retail food and beverage market (on a half-yearly average, in financial value terms). The Israeli market is the Group's home market, in which it is active in various categories.

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