An increase in first-quarter sales failed to stem a drop in profits for Israeli food maker Strauss Group as higher energy and raw material prices hit earnings.
Net profit excluding one-off items fell to INR65m (US$16.9m) from INR70m in the three-month period. The firm’s bottom line was also hurt by higher financing expenses and a rise in its effective tax rate.
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Operating profit, however, totalled NIS168m, an increase of 9.1% on the prior-year period. Sales in the period amounted to NIS2.06bn, an increase of 16.5% on last year. Organic growth in the group’s sales amounted to 15.6%, which included 26.1% growth from its coffee business and 30.5% grwtoh from its international dips and spreads division.
“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,” said president and CEO Gadi Lesin.
However, he added the firm was continuing to implement efficiency measures and was preparing to launch its spreads and dips operations in Mexico and in an additional geographical region with PepsiCo.
Click here to view the full earnings release.
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