An increase in third-quarter profits at Strauss Group was not enough to prevent the Israel-based food and drink maker reporting lower earnings over the first nine months of 2011.
Strauss said today (16 November) that its underlying net profit in the three months to the end of September was up 13.7% to ILS61m (US$16.4m).
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However, third-quarter earnings benefited from lower finance costs. Net profit in the first nine months of the year was ILS170m, down 18.7%. So far this year, Strauss’s finance costs have been higher, while underlying operating income over the first nine months was down 12.7% at ILS418m.
Operating income was hit by costs linked to building Strauss’s water operations in China and the UK, the simultaneous operation of two factories in the US, lower profits from coffee and the company’s promotional activity in Israel. Third-quarter operating profit was down 13.6% at ILS139m.
Raw materials, sales and marketing costs hit profits from Strauss’s coffee operations. In Israel, where Strauss sells its own brands, as well as products for the likes of Danone and PepsiCo, profits fell due to the company’s decision to bring forward promotional campaigns. Strauss said the moves were a response to the recent general protests at the cost of living in Israel.
Profits from Sabra, Strauss’s global dips venture with PepsiCo, were lower due to the running of two plants at the same time in the US.
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By GlobalDataHowever, Strauss had better news to report on sales. Turnover totalled ILS2bn, up 13.8%. Organic sales, excluding exchange rates, were up 12.2%. In the first nine months of the year, sales climbed 11.5% to ILS5.6bn. Organic sales growth, excluding currency fluctuation, was 10.2%.
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