Strauss Group's Second Quarter Results Demonstrate a Strong Performance in the Group's Core Businesses(1)

 

Sales grew a solid 5.6%; Operating and net profits rise led by Strauss Coffee, Strauss Water and Strauss Israel; Strauss Group will distribute dividends in the amount of NIS 160 million

PETACH TIKVA, Israel, Aug. 10, 2017 /PRNewswire/ -- Gadi Lesin, President and CEO of Strauss Group (TASE: STRS) (August 10, 2017): "The past quarter has delivered the first fruits of the implementation of the Group's strategy focusing on our core businesses, as we attained the full control of the coffee and water companies following minority acquisitions; increasing our holding in the joint venture in China and sold Max Brenner. These strong results are proof of the significant value these moves have delivered to the Group and to its shareholders. The business in Israel continues to outperform the Food & Beverage market, and the laudable achievements of Strauss Coffee and Strauss Water have positively impacted the bottom line, in spite of the continued effect of the recall by Sabra. We believe that the strategic changes implemented in our portfolio over the past year will continue to reflect positively on the group, enabling us to face the challenges which lie ahead in the global and local markets."

Q2 2017 highlights(1)

  • Organic sales growth, excluding foreign exchange effects, was c6.2%. Shekel sales were NIS c2 billion compared to NIS 1.9 billion in the corresponding period in 2016; sales were impacted by a negative currency translation amounting to NIS c13 million mainly as a result of the continued strengthening of the average exchange of the NIS against the USD compared to the corresponding period last year.
  • Gross profit was NIS c753 million (c36.9% of sales), up c2.7% compared to the corresponding period last year. Gross margins were down c1%.
  • Operating profit (EBIT) was NIS c187 million (c9.1% of sales), up c2.3% compared to the corresponding period last year. EBIT margins were down c0.3%.
  • EPS for shareholders of the Company was NIS c0.88, up c20.4% compared to the corresponding period.
  • Positive cash flows from operating activities totaled NIS c199 million, compared to NIS c296 million in the corresponding period last year.

(1)    Data represent the Company's non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period, reflects all adjustments necessary to delay recognition of profit or loss arising from commodity derivatives until the date when the inventory is sold to outside parties and other income and expenses, unless stated otherwise.

H1 2017 highlights(1)

  • Organic sales growth, excluding foreign exchange effects, was c6.7%. Shekel sales were NIS c4.1 billion compared to NIS 3.8 billion in the corresponding period in 2016; sales were impacted by a positive currency translation amounting to NIS c38 million mainly as a result of the continued strengthening of the average exchange of the Brazilian Real against the NIS compared to the corresponding period last year.
  • Gross profit was NIS c1,533 million (c37.2% of sales), up c5.1% compared to the corresponding period last year. Gross margins were down c1.1%.
  • Operating profit (EBIT) was NIS c410 million (c9.9% of sales), up c3.7% compared to the corresponding period last year. EBIT margins were down c0.5%.
  • EPS for shareholders of the Company was NIS c1.95, up c13.1% compared to the corresponding period.
  • Positive cash flows from operating activities totaled NIS c113 million, compared to NIS c270 million in the corresponding period last year.

(1)    Data represent the Company's non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period, reflects all adjustments necessary to delay recognition of profit or loss arising from commodity derivatives until the date when the inventory is sold to outside parties and other income and expenses, unless stated otherwise.

 

Non GAAP Figures (1)





Second Quarter


2017

2016

Change

Total Group Sales (NIS mm)

2,042

1,933

5.6%

Organic Sales Growth excluding FX



6.2%

Gross Profit (NIS mm)

753

733

2.7%

Gross Margins (%)

36.9%

37.9%

 -100 bps

EBITDA (NIS mm)

243

239

1.3%

EBITDA Margins (%)

11.9%

12.4%

 -50 bps

EBIT (NIS mm)

187

183

2.3%

EBIT Margins (%)

9.1%

9.4%

 -30 bps

Net Income Attributable to the Company's
Shareholders (NIS mm)

97

78

24.9%

Net Income Margin (Attributable to the
Company's Shareholders) (%)

4.8%

4.1%

+70 bps

EPS (NIS)

0.88

0.73

20.4%

Operating Cash Flow (NIS mm)

199

296

-32.6%

Capex (NIS mm) (2)

-71

-57

24.6%

Net debt (NIS mm)

2,138

1,574

35.8%

Net debt / annual EBITDA

2.2x

1.6x

0.6x

(1)    Data represent the Company's non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period, reflects all adjustments necessary to delay recognition of profit or loss arising from commodity derivatives until the date when the inventory is sold to outside parties and other income and expenses, unless stated otherwise.

(2)    Investments include the acquisition of fixed assets and investment in intangible 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 mm)

Sales
Growth vs. Last Year

Organic
Sales
Growth excluding
FX 

EBIT (NIS mm)

NIS
Change in EBIT

% Change
in EBIT 

EBIT
margins

Change in
EBIT
margins
vs. 2016

Sales and EBIT by Operating
Segments and Activities


















Strauss Israel:









Health & Wellness

516

5.0%

5.0%

55

7

13.7%

10.6%

+90 bps

Fun & Indulgence (2)

221

0.0%

0.0%

11

-4

-25.8%

4.9%

 -180 bps

Total Strauss Israel

737

3.4%

3.4%

66

3

4.4%

8.9%

+10 bps










Strauss Coffee:









Israel Coffee 

149

-2.4%

-2.4%

17

0

-2.4%

11.2%

--

International Coffee (2)

833

14.8%

14.7%

84

18

27.2%

10.2%

+100 bps

Total Strauss Coffee

982

11.8%

10.4%

101

18

21.2%

10.4%

+80 bps










International Dips & Spreads:









Sabra (50%) (2)

163

-13.0%

-6.3%

9

-18

-66.3%

5.5%

 -900 bps

Obela (50%) (2)

15

58.3%

24.6%

-3

1

NM

NM

NM

Total International Dips & Spreads

178

-9.5%

-4.2%

6

-18

-73.3%

3.6%

 -850 bps










Other (2)

145

-0.7%

7.7%

14

1

6.7%

9.2%

+60 bps

Total Group

2,042

5.6%

6.2%

187

4

2.3%

9.1%

 -30 bps

 

(1)    Data represent the Company's non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period, reflects all adjustments necessary to delay recognition of profit or loss arising from commodity derivatives until the date when the inventory is sold to outside parties and other income and expenses, 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 D&S figures reflect Strauss's 50% share in Sabra and Obela. Other Operations figures include Strauss's 34% share in the joint venture in China, Haier Strauss Water (HSW).

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


2017

2016

Change

Total Group Sales (NIS mm)

4,125

3,813

8.2%

Organic Sales Growth excluding FX



6.7%

Gross Profit (NIS mm)

1,533

1,459

5.1%

Gross Margins (%)

37.2%

38.3%

 -110 bps

EBITDA (NIS mm)

521

508

2.5%

EBITDA Margins (%)

12.6%

13.3%

 -70 bps

EBIT (NIS mm)

410

396

3.7%

EBIT Margins (%)

9.9%

10.4%

 -50 bps

Net Income Attributable to the Company's
Shareholders (NIS mm)

213

185

15.2%

Net Income Margin Attributable to the
Company's Shareholders (%)

5.2%

4.9%

+30 bps

EPS (NIS)

1.95

1.73

13.1%

Operating Cash Flow (NIS mm)

113

270

-58.1%

Capex (NIS mm) (2)

-132

-113

16.8%

Net debt (NIS mm)

2,138

1,574

35.8%

Net debt / annual EBITDA

2.2x

1.6x

0.6x

 

(1)    Data represent the Company's non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period, reflects all adjustments necessary to delay recognition of profit or loss arising from commodity derivatives until the date when the inventory is sold to outside parties and other income and expenses, unless stated otherwise.

(2)    Investments include the acquisition of fixed assets and investment in intangibles 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)











First Half


Sales (NIS mm)

Sales
Growth vs. Last Year

Organic
Sales
Growth excluding
FX 

EBIT (NIS mm)

NIS
Change in EBIT

% Change
in EBIT 

EBIT margins

Change in
EBIT
margins vs. 2016

Sales and EBIT by Operating
 Segments and Activities









Strauss Israel:









Health & Wellness

1,002

3.8%

3.8%

108

9

8.9%

10.7%

+50 bps

Fun & Indulgence (2)

553

5.8%

5.8%

63

1

2.1%

11.4%

 -50 bps

Total Strauss Israel

1,555

4.5%

4.5%

171

10

6.3%

11.0%

+20 bps










Strauss Coffee:









Coffee Israel 

361

4.0%

4.0%

57

5

8.4%

15.7%

+60 bps

International Coffee (2)

1,582

20.7%

15.4%

135

24

22.5%

8.6%

+10 bps

Total Strauss Coffee

1,943

17.2%

11.7%

192

29

18.0%

9.9%

--










International Dips & Spreads:









Sabra (50%) (2)

307

-15.3%

-10.1%

28

-30

-51.5%

9.1%

 -680 bps

Obela (50%) (2)

31

56.1%

24.1%

-5

2

NM

NM

NM

Total International Dips & Spreads


















Other (2)

289

1.2%

6.7%

24

3

15.9%

8.2%

+110 bps

Total Group

4,125

8.2%

6.7%

410

14

3.7%

9.9%

 -50 bps

 

(1)    Data represent the Company's non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period, reflects all adjustments necessary to delay recognition of profit or loss arising from commodity derivatives until the date when the inventory is sold to outside parties and other income and expenses, 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 D&S figures reflect Strauss's 50% share in Sabra and Obela. Other Operations figures include Strauss's 34% share in the joint venture in China, Haier Strauss Water (HSW).

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.

Appendix

Condensed financial accounting (GAAP)

Second Quarter


2017

2016

Change

Sales

1,288

1,273

1.1%

Cost of sales excluding impact of commodity hedges 

787

768

2.2%

Adjustments for commodity hedges

10

-21


Cost of sales

797

747

6.6%

Gross profit

491

526

-6.6%

% of sales

38.2%

41.3%


Selling and marketing expenses

309

305

1.4%

General and administrative expenses

86

86

0.8%

Total expenses

395

391


Share of profit of equity-accounted investees

50

52

-4.8%

Operating profit before other expenses

146

187

-22.5%

% of sales

11.3%

14.8%


Other expenses, net

-14

-16


Operating profit after other expenses

132

171

-23.2%

Financing expenses, net

-39

-26

45.0%

Income before taxes on income

93

145

-35.7%

Taxes on income

-10

-46

-78.1%

Effective tax rate

10.8%

31.7%


Income for the period

83

99

-16.0%

Attributable to the Company's shareholders

73

69

4.1%

Attributable to non-controlling interests

10

30

-64.3%


Condensed financial accounting (GAAP)

First Half


2017

2016

Change

Sales

2,696

2,594

3.9%

Cost of sales excluding impact of commodity hedges 

1,618

1,561

3.6%

Adjustments for commodity hedges

19

-27


Cost of sales

1,637

1,534

6.7%

Gross profit

1,059

1,060

-0.1%

% of sales

39.3%

40.9%


Selling and marketing expenses

627

597

5.1%

General and administrative expenses

179

173

3.7%

Total expenses

806

770


Share of profit of equity-accounted investees

94

103

-8.4%

Operating profit before other expenses

347

393

-11.9%

% of sales

12.9%

15.2%


Other expenses, net

-7

-18


Operating profit after other expenses

340

375

-9.3%

Financing expenses, net

-68

-56

20.3%

Income before taxes on income

272

319

-14.5%

Taxes on income

-40

-88

-54.4%

Effective tax rate

14.7%

27.6%


Income for the period

232

231

0.7%

Attributable to the Company's shareholders

180

173

3.7%

Attributable to non-controlling interests

52

58

-8.5%

Note: Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands.

Investor Conference Calls

Strauss Group will host an Investor Conference call in Hebrew on Thursday, August 10, 2017 at 14:00 (Israel time) to review the Financial Statements of the Company for the second quarter.

To participate please dial: 03-918-0688

Strauss Group will also host an Investor Conference call in English on Thursday, August 10, 2017 at 17:30 local Israel time (15:30 UK, 10:30 Eastern time) to review the Financial Statements of the Company for the second quarter.

To participate in the live call please dial one of the following numbers:

From the UK: 0-800-917-5108

From the US: 1-888-407-2553

From Israel: 03-918-0687

The Financial Statements and Investors Presentation are posted on the Group's Investor Relations website at:

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

Daniella.Finn@Strauss-Group.com

  

Osnat Golan

VP Communications & Digital, Spokesperson

Strauss Group Ltd.

972-52-828-8111

972-3-675-2281

Osnat.Golan@Strauss-Group.com

Or

Gil Messing

External Communications Director

Strauss Group Ltd.

972-54-252-5272

Gil.Messing@Strauss-Group.com

 

 

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SOURCE Strauss Group



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