Israeli food and drinks company Strauss-Elite Group posted a 19.5% rise in net income for the first quarter of 2006 to ILS62.4m (US$13.8m) on sales 31.8% higher at ILS1.26bn.

Domestic sales rose by 10.1% to ILS791.6m. The company said the increase was partly due to the timing of the Passover holiday which this year fell in the first quarter, whereas in 2005 it had been in the second quarter, but increased sales of fresh foods had also contributed to the growth.

International sales in the first quarter rose by 98.3% to ILS465.8m, boosted by acquisitions made over the last year in Serbia and Montenegro, Poland, the US and Brazil. Excluding the effect of the acquisitions, international sales growth in the first quarter of 2006 was 22%. Strauss-Elite added that organic revenue growth over the group as a whole, excluding the effect of acquisitions, was 13% for the first quarter.

Consolidated gross profit rose by 18.7% to ILS473.0m, on the back of the strong revenue growth in Israel and internationally. However, there was an erosion of 4.2% in the gross margin which Strauss-Elite attributed to the expanded contribution of the international business, which generally operates below the company's average gross margin. Gross margins were also negatively impacted by an increase in raw material costs and exchange rate effects, the company said. First-quarter operating profit rose by 15.2% to ILS110.7m.