Strauss Group announces a strong quarter with NIS 2.3 billion in revenue

Strauss Group has maintained its growth momentum as Strauss Israel, Strauss Water and Strauss Coffee deliver solid revenue growth.

The Group recorded NIS 52 million in profit from its FoodTech business

Net profit attributable to shareholders in the third quarter was NIS 204 million

PETAH TIKVA, Israel, Nov. 16, 2021 /PRNewswire/ — This morning, the international food and beverage company Strauss Group (TASE: STRS) published its financial statements for the third quarter of 2021. The financial statements demonstrate that the Group has continued the growth momentum as in the past quarters, with revenues for the quarter amounting to NIS 2.3 billion, an increase of 6.9% compared to the corresponding period last year. Sales growth is evident in most of the company’s operations: Strauss’s activity in Israel, Strauss Water’s business, and the worldwide operations of Strauss Coffee. Sales of the dips and spreads company Sabra in the US in the quarter were stable.

Strauss Group President & CEO, Giora Bardea: “Strauss is making strides in its growth journey while coping with the ongoing effects of the COVID-19 pandemic on world economy. Among other things, these effects are expressed in global increases in commodity prices, worldwide shipping and handling costs and industrial energy prices. Group management is working to preserve resilience and stability, while making investments to ensure that the company is well-aligned and will maintain its growth momentum in the future. This is reflected in the growth delivered by the Group in its core businesses, along with initial returns on its strategic investment in innovation and in the FoodTech industry, which had a positive effect on the Group’s profit in the quarter. ESG remains a core focus in our business and the Group is constantly improving its ESG scores. Together, these components will secure the Group’s continuing resilience and growth in the future”.

Despite the rise in revenues, the company reported stability in gross profit, which amounted to NIS 828 million, and a slight drop in operating profit (before inclusion of the profits of the FoodTech incubator), which amounted to NIS 248 million. Erosion of the gross and operating margins is largely the result of the increase in raw material prices, notably green coffee and milk, as well as rising global manufacturing and shipping costs as part of the fallout as the world emerges from the pandemic. Strauss reported a 20% increase in operating profit, which rose to NIS 300 million, and a 28.1% increase in net profit, which was NIS 204 million. This increase is due to a gain of NIS 52 million recorded by the company in its FoodTech business, which is largely the result of the impressive funding round closed by cultured meat developer, Aleph Farms. Furthermore, the incubator was recently joined by a new startup active in the manufacture of cultured fish products.

Strauss Israel continued to grow its business and market share and ended the quarter with a 2.4% sales growth, bringing sales to NIS 976 million. In the third quarter, the food industry in Israel recorded a drop of 3.6%, meaning that Strauss increased its market share by 0.4 percentage points to 12.3% according to StoreNext. During the quarter, the company launched the ready-to-heat frozen meals category (under the “Delicious” brand), the oat-based “Not Milk” drink, delivering innovation in the plant-based milk category, and the XXTRA Flamin’ Hot Doritos and Cheetos snack food series. The company improved its operating margin due to sales growth and operating cost savings. Sales growth largely originated in the dairy and dairy alternative product category as well as the salty snack category. The salads category remained stable, whereas confectionery sales dropped compared to the corresponding period last year, among other things due to the timing of the Jewish high holidays, which this year fell entirely in September.

In the third quarter, Strauss Coffee’s business was marked by rising world green coffee prices, which increased at higher rates compared to the corresponding period, among other things due to freak frost that damaged coffee plantations in various Brazilian states. Following the increase in the cost of green coffee, retail coffee prices were revised in Brazil (Três Corações (JV)). The company in Brazil also delivered growth in quantities sold, and in total, reported a 37.1% sales growth in local currency. However, the joint venture’s gross and operating margins eroded. In Israel, the coffee business experienced a slight drop of 1.7% in sales due to the timing of the holidays in September. During the quarter, the coffee company launched its new aluminum capsules as well as the new Turkish Coffee “Tastes of the Market” limited edition offering – Galilee and Jerusalem – containing exotic blends of spices and herbs. The coffee business in Eastern Europe was marked by stability, with a slight drop in sales in Russia and Ukraine. In the third quarter and in the months of October and November, prices were raised in Ukraine, Romania, Serbia and Poland.

Strauss Water continued to grow with sales rising by 4.9% to approximately NIS 192 million. The company, which in the past quarter launched its new tami4edge water bar, has reported growth in both the number of customers and in the number of new appliances sold. The water business in China (Haier Strauss Water (HSW)), where the fight against COVID-19 continues, grew 8.9% in the third quarter.

Sabra, which has experienced challenges posed by the effects of the pandemic, reported a slight recovery in sales and moderate growth of 1.3% in the third quarter in local currency, with sales increasing to USD 97 million along with market share growth compared to the corresponding period last year. However, the company reported that its operating profit declined by 26% as a result of rising raw material prices, manufacturing and shipping costs.

Non GAAP Figures (1)

Third Quarter

2021

2020

Change

Total Group Sales (NIS mm)

2,297

2,174

5.7%

Organic Sales Growth excluding FX

6.9%

3.9%

Gross Profit (NIS mm)

828

824

0.4%

Gross Margins (%)

36.0%

37.9%

-190 bps

EBITDA (NIS mm)

389

339

14.5%

EBITDA Margins (%)

16.9%

15.6%

+130 bps

EBIT (NIS mm)

300

250

20.0%

EBIT Margins (%)

13.1%

11.5%

+160 bps

Net Income Attributable to the Company’s
Shareholders (NIS mm)

204

158

28.1%

Net Income Margin (Attributable to
the Company’s Shareholders) (%)

8.9%

7.3%

+160 bps

EPS (NIS)

1.75

1.37

27.9%

Operating Cash Flow (NIS mm)

304

183*

66.0%

Capex (NIS mm) (2)

72

73

-1.4%

Net debt (NIS mm)

1,926

1,993

-3.4%

Net debt / annual EBITDA

1.4x

1.6x

(0.2x)

* Restated.

(1) The data in this document are based on the company’s non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses and do not include share-based payment, mark-to-market at end-of-period of open positions in the Group in respect of financial derivatives used to hedge commodity prices and all adjustments necessary to delay recognition of gains and losses arising from commodity derivatives until the date when the inventory is sold to outside parties, other income and expenses, net, and the tax effect of excluding those items, unless stated otherwise.

(2) Investments include the acquisition of fixed assets, investment in intangible assets and proceeds from the sale of fixed assets

Note: Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands

Financial data were rounded to NIS millions.

Non GAAP Figures (1)

Third Quarter

Sales (NIS mm)

Sales Growth vs. Last Year

Organic Sales Growth excluding FX

EBIT (NIS mm)

NIS Change in EBIT

% Change in EBIT

EBIT margins

Change in EBIT margins vs. 2020

Sales and EBIT by Operating Segments and Activities

Strauss Israel:

Health & Wellness

705

4.3%

4.3%

97

11

11.6%

13.6%

+90 bps

Fun & Indulgence (2)

271

-2.5%

-2.5%

16

-4

-15.4%

6.3%

-90 bps

Total Strauss Israel

976

2.4%

2.4%

113

7

6.5%

11.6%

+50 bps

Strauss Coffee:

Israel Coffee

173

-1.7%

-1.7%

35

-5

-13.3%

19.8%

-270 bps

International Coffee (2)

780

15.4%

18.1%

61

-2

-1.8%

8.0%

-140 bps

Total Strauss Coffee

953

11.9%

13.9%

96

-7

-6.5%

10.1%

-200 bps

International Dips & Spreads:

Sabra (50%) (2)

156

-4.3%

1.3%

13

-5

-29.9%

8.5%

-300 bps

Obela (50%) (2)

20

-10.7%

-8.3%

1

89.9%

NM

NM

Total International Dips & Spreads

176

-4.9%

0.1%

13

-4

-23.8%

7.4%

-180 bps

Strauss Water (2)

192

4.9%

4.8%

26

1

1.5%

13.2%

-50 bps

Other

NM

NM

52

53

7,332.0%

NM

NM

Total Group

2,297

5.7%

6.9%

300

50

20.0%

13.1%

+160 bps

(1) The data in this document are based on the company’s non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses and do not include share-based payment, mark-to-market at end-of-period of open positions in the Group in respect of financial derivatives used to hedge commodity prices and all adjustments necessary to delay recognition of gains and losses arising from commodity derivatives until the date when the inventory is sold to outside parties, other income and expenses, net, and the tax effect of excluding those items, unless stated otherwise.

(2) Fun & Indulgence figures include Strauss’s 50% share in the salty snacks business. International Coffee figures include Strauss’s 50% share in the Três Corações joint venture (3C) – Brazil – a company jointly held by the Group (50%) and by the local São Miguel Group (50%). International Dips & Spreads figures reflect Strauss’s 50% share in Sabra and Obela. Strauss Water EBIT figures include Strauss’s share in Haier Strauss Water (HSW) in China (49%).

Note: Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands. Total figures for International Dips & Spreads were calculated on the basis of the exact figures for Sabra and Obela in NIS thousands.

Non GAAP Figures (1)

First Nine Months

2021

2020

Change

Total Group Sales (NIS mm)

6,490

6,280

3.3%

Organic Sales Growth excluding FX

5.6%

4.5%

Gross Profit (NIS mm)

2,435

2,445

-0.4%

Gross Margins (%)

37.5%

38.9%

-140 bps

EBITDA (NIS mm)

1,058

1,002

5.5%

EBITDA Margins (%)

16.3%

16.0%

+30 bps

EBIT (NIS mm)

801

741

8.0%

EBIT Margins (%)

12.3%

11.8%

+50 bps

Net Income Attributable to the Company’s Shareholders (NIS mm)

536

464

15.4%

Net Income Margin (Attributable to the Company’s Shareholders) (%)

8.3%

7.4%

+90 bps

EPS (NIS)

4.61

4.01

15.1%

Operating Cash Flow (NIS mm)

612

581*

5.3%

Capex (NIS mm) (2)

199

206

-3.4%

Net debt (NIS mm)

1,926

1,993

-3.4%

Net debt / annual EBITDA

1.4x

1.6x

(0.2x)

* Restated.

(1) The data in this document are based on the company’s non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses and do not include share-based payment, mark-to-market at end-of-period of open positions in the Group in respect of financial derivatives used to hedge commodity prices and all adjustments necessary to delay recognition of gains and losses arising from commodity derivatives until the date when the inventory is sold to outside parties, other income and expenses, net, and the tax effect of excluding those items, unless stated otherwise.

(2) Investments include the acquisition of fixed assets, investment in intangible assets and proceeds from the sale of fixed assets.

Note: Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands

Non GAAP Figures (1)

First Nine Months

Sales (NIS mm)

Sales Growth vs. Last Year

Organic Sales Growth excluding FX

EBIT (NIS mm)

NIS Change in EBIT

% Change in EBIT

EBIT margins

Change in EBIT margins vs. 2020

Sales and EBIT by Operating Segments and Activities

Strauss Israel:

Health & Wellness

2,008

5.1%

5.1%

261

26

10.5%

12.9%

+60 bps

Fun & Indulgence (2)

859

-2.0%

-2.0%

89

-4

-3.6%

10.4%

-20 bps

Total Strauss Israel

2,867

2.9%

2.9%

350

22

6.5%

12.2%

+40 bps

Strauss Coffee:

Israel Coffee

545

0.3%

0.3%

120

-6

-4.7%

22.0%

-110 bps

International Coffee (2)

2,007

5.5%

11.9%

152

-5

-2.7%

7.6%

-70 bps

Total Strauss Coffee

2,552

4.4%

9.2%

272

-11

-3.7%

10.7%

-90 bps

International Dips & Spreads:

Sabra (50%) (2)

460

-8.0%

-1.7%

42

-17

-29.6%

9.0%

-280 bps

Obela (50%) (2)

63

4.3%

0.7%

-5

8.2%

NM

NM

Total International Dips & Spreads

523

-6.7%

-1.4%

37

-17

-31.7%

7.0%

-260 bps

Strauss Water (2)

548

12.6%

12.3%

70

0

-1.1%

12.7%

-180 bps

Other

NM

NM

72

66

1046.2%

NM

NM

Total Group

6,490

3.3%

5.6%

801

60

8.0%

12.3%

+50 bps

(1) The data in this document are based on the company’s non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses and do not include share-based payment, mark-to-market at end-of-period of open positions in the Group in respect of financial derivatives used to hedge commodity prices and all adjustments necessary to delay recognition of gains and losses arising from commodity derivatives until the date when the inventory is sold to outside parties, other income and expenses, net, and the tax effect of excluding those items, unless stated otherwise.

(2) Fun & Indulgence figures include Strauss’s 50% share in the salty snacks business. International Coffee figures include Strauss’s 50% share in the Três Corações joint venture (3C) – Brazil – a company jointly held by the Group (50%) and by the local São Miguel Group (50%). International Dips & Spreads figures reflect Strauss’s 50% share in Sabra and Obela. Strauss Water EBIT figures include Strauss’s share in Haier Strauss Water (HSW) in China (49%).

Note: Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands. Total figures for International Dips & Spreads were calculated on the basis of the exact figures for Sabra and Obela in NIS thousands.

Condensed financial accounting (GAAP)

Third Quarter

2021

2020

Change

Sales

1,546

1,541

0.3%

Cost of sales excluding impact of commodity hedges

933

932

0.2%

Adjustments for commodity hedges

10

-19

Cost of sales

943

913

3.3%

Gross profit

603

628

-3.9%

% of sales

39.0%

40.7%

Selling and marketing expenses

332

336

-1.2%

General and administrative expenses

106

97

8.9%

Total expenses

438

433

1.0%

Share of profit of equity-accounted investees

62

*66

-7.6%

Share of profit (loss) of equity-accounted incubator investees

52

*-2

2,127.2%

Operating profit before other expenses

279

259

7.7%

% of sales

18.1%

16.8%

Other expenses, net

-3

Operating profit after other expenses

276

259

6.8%

Financing expenses, net

-25

-25

0.2%

Income before taxes on income

251

234

7.5%

Taxes on income

-42

-48

-12.0%

Effective tax rate

16.8%

20.5%

Income for the period

209

186

12.5%

Attributable to the Company’s shareholders

189

168

12.6%

Attributable to non-controlling interests

20

18

11.8%

Condensed financial accounting (GAAP)

First Nine Months

2021

2020

Change

Sales

4,513

4,419

2.1%

Cost of sales excluding impact of commodity hedges

2,686

2,623

2.4%

Adjustments for commodity hedges

-1

-1

Cost of sales

2,685

2,622

2.4%

Gross profit

1,828

1,797

1.8%

% of sales

40.5%

40.7%

Selling and marketing expenses

981

972

1.0%

General and administrative expenses

313

301

3.9%

Total expenses

1,294

1,273

1.7%

Share of profit of equity-accounted investees

150

*189

-20.9%

Share of profit (loss) of equity-accounted incubator investees

75

*-7

1,208.4%

Operating profit before other expenses

759

706

7.5%

% of sales

16.8%

16.0%

Other expenses, net

Operating profit after other expenses

759

706

7.6%

Financing expenses, net

-47

-82

-43.0%

Income before taxes on income

712

624

14.2%

Taxes on income

-134

-121

10.8%

Effective tax rate

18.8%

19.4%

Income for the period

578

503

15.0%

Attributable to the Company’s shareholders

522

450

16.2%

Attributable to non-controlling interests

56

53

5.1%

* Reclassified

Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands.

Conference Call

Strauss Group will host a Zoom conference call in Hebrew on Tuesday, November 16, 2021 at 14:00 (Israel time) with the participation of company management to review the financial statements of the company for the third quarter of 2021. Following is information for those wishing to join the conference:

Strauss Group will also host a Zoom conference call in English on Tuesday, November 16, 2021 at 15:30 (Israel time) (13:30 UK, 08:30 EST) with the participation of company management to review the financial statements of the company for the third quarter of 2021.

A recording of the calls will subsequently be available on the company’s website at:
https://ir.strauss-group.com/company-presentations/conference-call-recordings/

The financial statements of the company for the third quarter of 2021 and the presentation that will accompany the conferences will be available prior to the conference calls on the following websites:
https://ir.strauss-group.com/company-presentations/quarterly-presentations/

https://ir.strauss-group.com/earning-releases/

For further information, please contact:

[1] Organic growth excluding foreign currency effects.

The data in this document are based on the company’s non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses and do not include share-based payment, mark-to-market at end-of-period of open positions in the Group in respect of financial derivatives used to hedge commodity prices and all adjustments necessary to delay recognition of gains and losses arising from commodity derivatives until the date when the inventory is sold to outside parties, other income and expenses, net, and the tax effect of excluding those items, unless stated otherwise.

Cision

Cision

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SOURCE Strauss Group Ltd.

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