Strauss Group delivers NIS 5.2 billion in revenues in first half of 2023 with 10% organic growth[1] as margin erosion persists, and NIS 219 million in net profit[2]
Alongside business growth in Israel, Brazil, China and Europe, Strauss Group has contended with continuing profit erosion and elevated raw material prices; CEO Shai Babad: "We continue to pursue the implementation of our strategic plans and consumer-centric innovation, while implementing productivity improvement processes"
PETAH TIKVA, Israel, Aug. 15, 2023 /PRNewswire/ -- This morning, Strauss Group (TASE: STRS) published its financial statements for the second quarter of 2023, summing up the first half-year with 10.1% organic growth and NIS 5,179 million in revenues, largely thanks to continuing growth in the company's business in Israel, China, the United States and Brazil. Revenues in the second quarter were NIS 2,625 million, reflecting 12.4% organic growth.
Gross profit in the half-year was NIS 1,676 million, 32.4% of sales, and operating profit was NIS 379 million, 7.3% of sales, reflecting a persistent downward trend in profit margins due to ongoing input inflation and rising raw material prices. Net income attributable to shareholders in the six-month period was NIS 219 million. In the second quarter, the Group's gross profit was NIS 839 million, 31.9% of sales, and operating profit was NIS 171 million, 6.5% of sales.
Shai Babad, Strauss Group CEO: "Strauss delivered a half-year of sustained growth across all businesses in all regions, as margins continue to erode as a result of elevated raw material prices and inflation. We continue to pursue the implementation of our strategic plans, the launch of new products and consumer-centric innovation, while implementing internal productivity improvement processes to increase our margins, and optimizing our portfolio."
Strauss Israel delivered revenues of NIS 2,020 million in the first half, reflecting 15.6% growth compared to the corresponding period last year. Strauss Israel's operating profit was NIS 186 million.
The company's market share3 in Israel grew to 11.9% compared to 11.5% last year, but it has still not regained pre-recall levels (12.3%).
Health & Wellness sales were NIS 1,497 million, up 11.7%, and operating profit was NIS 162 million.
The Fun & Indulgence segment's revenues in the half-year were NIS 523 million, reflecting an increase of 28.6%, and operating profit was NIS 24 million. The confectionery business continued to recover with a market share of 23.6%[4] in the second quarter and 24.4% in July, compared to 28%-29% before the 2022 recall.
[1] Organic, excluding foreign currency effects |
Strauss Coffee delivered another half-year of growth with revenues of NIS 2,506 million, reflecting 12.6% growth over the corresponding period. The coffee company's operating profit was NIS 190 million, down 18.6% compared to the same period last year. In Israel, coffee revenues were NIS 407 million, up 3% compared to the first half of 2022, and operating profit was NIS 53 million, reflecting a decline of 22.4% compared to last year.
In Brazil, the coffee company Três Corações delivered revenue growth with sales of NIS 1,404 million, (for 50% ownership) up 11.1%. Operating profit was NIS 96 million, down 45% compared to the corresponding half-year in 2022, due to the moderation of coffee selling prices in Brazil. Três Corações's average value market share in roast & ground (R&G) coffee in the first half of 2023 was 33.8%, compared to 32.7% last year.
Revenues in the coffee business in Russia and Ukraine were NIS 336 million, up 18.5%; Poland – NIS 169 million, up 25.2%; Romania – NIS 111 million, up 29.2%; and Serbia – NIS 79 million, up 25.4%.
The International Dips & Spreads segment continued to rally as market shares in the US improved and revenues continued to recover and grow. Sales in the first half were NIS 260 million (for 50% ownership), up 35%, and the operating loss was NIS 10 million. Sabra's sales amounted to NIS 221 million, (for 50% ownership) up 46.3%, and the operating loss was NIS 6 million. In July, Sabra's market share in North America rose to 40.8%.5
Strauss Water continued to grow in the first half with revenues of NIS 392 million, up 2.5% compared to last year. Operating profit in the period was NIS 45 million, down 6.1%. In the half-year, the water business in China delivered revenues of NIS 395 million (for 100% ownership),12.5% growth and NIS 48 million in net profit (100% ownership).
The Kitchen FoodTech Hub: Since its establishment, the FoodTech incubator has invested in 25 companies. As of June 30, 2023, the total value of investments in the portfolio startups, which are presented in the financial statements according to the equity method, was NIS 116 million (on June 30, 2022: NIS 150 million). The fair value of these investments on the same date was NIS 613 million (June 30, 2022: NIS 559 million).
[5] Circana POS, MULO-C through 18.06.23 |
Non GAAP Figures (1) |
|||
Second Quarter |
|||
2023 |
2022 |
Change |
|
Total Group Sales (NIS mm) |
2,625 |
2,276 |
15.3 % |
Organic Sales Growth excluding FX |
12.4 % |
4.6 % |
|
Gross Profit (NIS mm) |
839 |
691 |
21.2 % |
Gross Margins (%) |
31.9 % |
30.4 % |
+150 bps |
EBITDA (NIS mm) |
275 |
201 |
36.6 % |
EBITDA Margins (%) |
10.5 % |
8.9 % |
+160 bps |
EBIT (NIS mm) |
171 |
102 |
65.2 % |
EBIT Margins (%) |
6.5 % |
4.5 % |
+200 bps |
Net Income Attributable to the Company's |
85 |
70 |
21.3 % |
Net Income Margin (Attributable to the |
3.2 % |
3.1 % |
+10 bps |
EPS (NIS) |
0.72 |
0.60 |
21.2 % |
Operating Cash Flow (NIS mm) |
61 |
140 |
-56.4 % |
Capex (NIS mm) (2) |
127 |
99 |
28.3 % |
Net debt (NIS mm) |
2,977 |
2,455 |
21.3 % |
Net debt / annual EBITDA |
3.0x |
3.0x |
0.0x |
(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) |
||||||||
Second Quarter |
||||||||
Sales (NIS |
Sales |
Organic |
EBIT (NIS |
NIS Change |
% Change |
EBIT |
Change in |
|
Sales and EBIT by Operating Segments |
||||||||
Strauss Israel: |
||||||||
Health & Wellness |
754 |
12.3 % |
12.3 % |
77 |
13 |
19.9 % |
10.2 % |
+60 bps |
Fun & Indulgence (2) |
217 |
115.1 % |
115.1 % |
0 |
75 |
-99.2 % |
-0.3 % |
+7410 bps |
Total Strauss Israel |
971 |
25.7 % |
25.7 % |
77 |
88 |
-809.2 % |
7.9 % |
+930 bps |
Strauss Coffee: |
||||||||
Israel Coffee |
169 |
-6.1 % |
-6.1 % |
14 |
-6 |
-33.5 % |
8.2 % |
-340 bps |
International Coffee (2) |
1,148 |
9.3 % |
4.2 % |
77 |
-30 |
-27.7 % |
6.7 % |
-350 bps |
Total Strauss Coffee |
1,317 |
7.1 % |
2.7 % |
91 |
-36 |
-28.7 % |
6.9 % |
-350 bps |
International Dips & Spreads: |
||||||||
Sabra (50%) (2) |
116 |
113.7 % |
96.0 % |
-5 |
23 |
81.8 % |
-4.4 % |
+4760 bps |
Obela (50%) (2) |
17 |
-11.9 % |
-16.8 % |
-4 |
-1 |
-22.3 % |
NM |
NM |
Total International Dips & Spreads |
133 |
80.1 % |
66.9 % |
-9 |
22 |
71.3 % |
-6.8 % |
+3570 bps |
Strauss Water |
204 |
2.1 % |
1.8 % |
24 |
1 |
3.0 % |
11.8 % |
+10 bps |
Other (2)(3) |
0 |
NM |
NM |
-12 |
-6 |
-94.9 % |
NM |
NM |
Total Group |
2,625 |
15.3 % |
12.4 % |
171 |
69 |
65.2 % |
6.5 % |
+200 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 Half |
|||
2023 |
2022 |
Change |
|
Total Group Sales (NIS mm) |
5,179 |
4,548 |
13.9 % |
Organic Sales Growth excluding FX |
10.1 % |
8.0 % |
|
Gross Profit (NIS mm) |
1,676 |
1,353 |
23.8 % |
Gross Margins (%) |
32.4 % |
29.8 % |
+260 bps |
EBITDA (NIS mm) |
585 |
395 |
48.1 % |
EBITDA Margins (%) |
11.3 % |
8.7 % |
+260 bps |
EBIT (NIS mm) |
379 |
204 |
84.6 % |
EBIT Margins (%) |
7.3 % |
4.5 % |
+280 bps |
Net Income Attributable to the Company's |
219 |
113 |
94.5 % |
Net Income Margin Attributable to the |
4.2 % |
2.5 % |
+170 bps |
EPS (NIS) |
1.88 |
0.97 |
94.2 % |
Operating Cash Flow (NIS mm) |
-165 |
16 |
-1102.2 % |
Capex (NIS mm) (2) |
201 |
176 |
14.2 % |
Net debt (NIS mm) |
2,977 |
2,455 |
21.3 % |
Net debt / annual EBITDA |
3.0x |
3.0x |
0.0x |
(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 Half |
||||||||
Sales (NIS |
Sales |
Organic |
EBIT (NIS |
NIS Change |
% Change |
EBIT |
Change in |
|
Sales and EBIT by Operating Segments |
||||||||
Strauss Israel: |
||||||||
Health & Wellness |
1,497 |
11.7 % |
11.7 % |
162 |
16 |
10.7 % |
10.8 % |
-10 bps |
Fun & Indulgence (2) |
523 |
28.6 % |
28.6 % |
24 |
196 |
113.7 % |
4.5 % |
+4690 bps |
Total Strauss Israel |
2,020 |
15.6 % |
15.6 % |
186 |
212 |
812.9 % |
9.2 % |
+1070 bps |
Strauss Coffee: |
||||||||
Coffee Israel |
407 |
3.0 % |
3.0 % |
53 |
-14 |
-22.4 % |
12.9 % |
-430 bps |
International Coffee (2) |
2,099 |
14.6 % |
6.7 % |
137 |
-28 |
-17.1 % |
6.5 % |
-250 bps |
Total Strauss Coffee |
2,506 |
12.6 % |
6.1 % |
190 |
-42 |
-18.6 % |
7.6 % |
-290 bps |
International Dips & Spreads: |
||||||||
Sabra (50%) (2) |
221 |
46.3 % |
32.7 % |
-6 |
37 |
124.4 % |
-2.9 % |
+2570 bps |
Obela (50%) (2) |
39 |
-5.8 % |
-10.8 % |
-4 |
1 |
30.6 % |
NM |
NM |
Total International Dips & Spreads |
260 |
35.1 % |
24.1 % |
-10 |
38 |
79.3 % |
-3.9 % |
+2130 bps |
Strauss Water |
392 |
2.5 % |
2.3 % |
45 |
-3 |
-6.1 % |
11.6 % |
-110 bps |
Other (2)(3) |
1 |
NM |
NM |
-32 |
-30 |
-1405.6 % |
NM |
NM |
Total Group |
5,179 |
13.9 % |
10.1 % |
379 |
175 |
84.6 % |
7.3 % |
+280 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) |
|||
First Half |
|||
2023 |
2022 |
Change |
|
Sales |
3,344 |
2,932 |
14.1 % |
Cost of sales excluding impact of commodity hedges |
2,154 |
1,975 |
9.0 % |
Adjustments for commodity hedges |
-57 |
-4 |
|
Cost of sales |
2,097 |
1,971 |
6.4 % |
Gross profit |
1,247 |
961 |
29.8 % |
% of sales |
37.3 % |
32.8 % |
|
Selling and marketing expenses |
676 |
664 |
1.8 % |
General and administrative expenses |
241 |
213 |
13.0 % |
Total expenses |
917 |
877 |
4.6 % |
Share of profit of equity-accounted investees |
92 |
72 |
27.5 % |
Share of profit (loss) of equity-accounted incubator investees |
-17 |
1 |
-1824.5 % |
Operating profit before other expenses |
405 |
157 |
158.2 % |
% of sales |
12.1 % |
5.4 % |
|
Other expenses, net |
61 |
-31 |
|
Operating profit after other expenses |
466 |
126 |
271.1 % |
Financing expenses, net |
-30 |
6 |
578.0 % |
Income before taxes on income |
436 |
132 |
231.3 % |
Taxes on income |
-104 |
-32 |
231.2 % |
Effective tax rate |
23.9 % |
23.9 % |
|
Income for the period |
332 |
100 |
231.3 % |
Attributable to the Company's shareholders |
304 |
69 |
339.8 % |
Attributable to non-controlling interests |
28 |
31 |
-8.9 % |
Condensed financial accounting (GAAP) |
|||
Second Quarter |
|||
2023 |
2022 |
Change |
|
Sales |
1,631 |
1,421 |
14.8 % |
Cost of sales excluding impact of commodity hedges |
1,048 |
921 |
13.8 % |
Adjustments for commodity hedges |
-4 |
-2 |
|
Cost of sales |
1,044 |
919 |
13.6 % |
Gross profit |
587 |
502 |
16.8 % |
% of sales |
36.0 % |
35.3 % |
|
Selling and marketing expenses |
346 |
340 |
1.9 % |
General and administrative expenses |
120 |
106 |
13.1 % |
Total expenses |
466 |
446 |
4.5 % |
Share of profit of equity-accounted investees |
47 |
27 |
75.3 % |
Share of profit (loss) of equity-accounted incubator investees |
-9 |
-7 |
23.5 % |
Operating profit before other expenses |
159 |
76 |
108.6 % |
% of sales |
9.7 % |
5.4 % |
|
Other expenses, net |
-9 |
-3 |
|
Operating profit after other expenses |
150 |
73 |
106.8 % |
Financing expenses, net |
-19 |
20 |
-192.2 % |
Income before taxes on income |
131 |
93 |
40.6 % |
Taxes on income |
-45 |
-24 |
86.5 % |
Effective tax rate |
34.3 % |
25.9 % |
|
Income for the period |
86 |
69 |
24.6 % |
Attributable to the Company's shareholders |
73 |
55 |
31.6 % |
Attributable to non-controlling interests |
13 |
14 |
-2.6 % |
Conference Call
Strauss Group will host a Zoom conference call in Hebrew on Tuesday, August 15, 2023 at 14:30 (Israel time) with the participation of company management to review the financial statements of the company for the second quarter of 2023. Following is the information for those wishing to join the online conference:
Meeting URL:
https://strauss-group.zoom.us/j/95947058607?pwd=S2Q3b2trYXFJemV5UHR6b21SRGs0Zz09
Passcode: 681841
Strauss Group will also host a Zoom conference call in English on Tuesday, August 15, 2023 at 15:30 (Israel time) with the participation of company management to review the financial statements of the company for the second quarter of 2023.
Meeting URL:
https://strauss-group.zoom.us/j/98151546175?pwd=T2sxYm1LSi9lVDZDMGhPbjZpaFk0QT09
Passcode: 862154
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 second quarter of 2023 and the presentation that will accompany the conferences will be available prior to the conference calls on the following websites:
http://www.tase.co.il
http://www.magna.isa.gov.il
http://ir.strauss-group.com/phoenix.zhtml?c=92539&p=irol-irhome
For further information, please contact:
Daniella Finn
Director of Investor Relations
Strauss Group Ltd.
972-54-577-2195
972-3-675-2545
[email protected]
Telem Yahav
Head of Content & Digital Strategy
Strauss Group Ltd.
972-52-257-9939
972-3-675-6713
[email protected]
SOURCE Strauss Group Ltd.
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