•  Bottom line jumps 90.9%
  •  EBIT up 23.1%
  •  Sales down 3.4%
Strauss profit jumps, sales slide

Strauss profit jumps, sales slide

Israeli food-to-coffee company Strauss Group has booked an increase in first-quarter profits, despite lower sales.

In an announcement to the market, Strauss said net profit rose 90.9% in the period to ILS140m (US$37.8m). The bottom line was boosted by a lower effective tax rate, lower financing costs and reduced operating expenses. Operating profit 23.1% in the three months, climbing to ILS186m, on lower cost of sales and reduced selling and marketing expenses.

Strauss said its international dips and spreads unit, as well as its coffee business, put in a particularly strong profit performance.

CEO Gadi Lesin said: "Overall, the group posted strong operating results thanks mainly to the improvement in the international coffee business as well as the dips and spreads segment, and as a result of the continued implementation of streamlining processes across all of the group's businesses."

Sales at the firm fell 3.4% in the period, dropping to ILS1.42bn. The company blamed the dip on the impact of currency exchange: excluding FX organic sales were flat.

Show the press release

 

Strauss Group Announces Results For First Quarter 2013

TEL AVIV, IsraelMay 28, 2013 /PRNewswire/ --

  Posts Strong Operating Profit Due to Solid Performance by Strauss Coffee's International Operations

The Group's sales in the first quarter totaled NIS 2.0 billion and were impacted by the erosion of the average exchange rate of the Brazilian Real versus the Shekel;

The Group posted a record non-GAAP operating profit, which amounted to NIS 214 million

Gadi Lesin, President and Chief Executive Officer of the Strauss Group, commented, "Strauss's international activity continued to prove its strength in the quarter, expanding profit despite a significant negative impact from changes in relevant currency exchange rates. Our home market in Israel also maintained its positive performance. Overall, the Group posted strong operating results thanks mainly to the improvement in the international coffee business as well as the dips and spreads segment, and as a result of the continued implementation of streamlining processes across all of the Group's businesses. At the same time, we are continuing to invest in the Group's future growth drivers and in innovation in all areas of our activity. Our goal remains to continue to deliver real added value to consumers, while enhancing our strength as a leading Group."

Key data on the first quarter of 2013 [1]

Commencing in the first quarter of 2013, the Strauss Group retroactively applied IFRS 11 - Joint Arrangements. The significance of the standard is that businesses which are jointly controlled by Strauss and a partner are no longer presented according to Strauss's relative holding in the entity, but in a separate row ("Income of equity-accounted investees" in the statements of income and in the other statements in the relevant section). The reporting method does not alter the Group's profit. As this is a change in reporting method only, and in light of the fact that the Group's non-GAAP reports and the manner in which Management measures the results of operations of subsidiaries have remained unchanged, the Group continues to present the activity segments in the identical manner in which they were presented in prior periods.

  • Sales totaled NIS 2.0 billion (compared with NIS 2.1 billion last year), a decrease of 2.5%; excluding the negative impact of changes in exchange rates, organic sales grew by 0.1% over the last year.
  • Non-GAAP gross profit totaled NIS 767 billion (38.1% of sales) compared to NIS 731 billion in the corresponding quarter last year (35.4% of sales), an increase of 4.9%.
  • Non-GAAP operating profit (EBIT) totaled NIS 214 million (10.6% of sales) compared to NIS 168 millionin the corresponding quarter last year (8.1% of sales), an increase of 27.5%. The growth was primarily due to the significant growth in the profits of International Coffee and International Dips and Spreads.
  • Non-GAAP net income attributable to the Company's shareholders totaled NIS 103 million (5.1% of sales) compared to NIS 65 million in the corresponding quarter last year (3.2% of sales), an increase of 57.2%.
  • Cash flows from operating activities (GAAP) amounted to a negative cash flow of NIS 25 millioncompared to a negative cash flow of NIS 86 million in the corresponding quarter last year.
  • Net credit (GAAP) as at March 31, 2013 totaled NIS 1,306 million (compared to NIS 1,471 million onMarch 31, 2012 and NIS 1,199 million on December 31, 2012.

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1. Based on non-GAAP data, which do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period, and other income and expenses, unless stated otherwise.


ANALYSIS OF FINANCIAL RESULTS

Following are the condensed financial accounting statements of income (GAAP) for the quarters endedMarch 31, 2013 and 2012 (in NIS millions)*:

                                                               First Quarter
                                                            2013    2012  % Chg
    Sales                                                  1,418   1,468   (3.4)
    Cost of sales excluding impact of hedging transactions   854     892   (4.2)
    Valuation of balance of commodity hedging
    transactions as at end of period                         (18)     (2)
    Cost of sales                                            836     890   (6.0)
    Gross profit                                             582     578    0.6
    % of sales                                              41.1%   39.4%
    Selling and marketing expenses                           319     335   (5.0)
    General and administrative expenses                       80      82   (2.6)
    Operating profit before other income (expenses)          183     161   14.0
    % of sales                                              12.9%   11.0%
    Other income (expenses), net                               3      (9)
    Operating profit after other income (expenses)           186     152   23.1
    Financing expenses, net                                  (21)    (34) (36.5)
    Share in income (losses) of equity-accounted investees    31      (2)
    Income before taxes on income                            196     116   70.5
    Taxes on income                                          (56)    (42)  34.4
    Effective tax rate                                      28.5%   36.1%
    Income for the period                                    140      74   90.9
    Attributable to:
    The Company's shareholders                               108      57   90.4
    Non-controlling interests                                 32      17   92.7

 

Original source: Strauss Group