Petach Tikva / IL. (sg) Israel’s Strauss Group Limited posts yet another strong set of annual results with sales growth up 6.9 percent for 2017, or 8 percent excluding foreign currency effects; net income rises an impressive 23.7 percent for the year due to excellent results at Strauss coffee, Strauss Israel and Strauss Water, the Group said in a news release this week.
President and CEO Gadi Lesin: «Strauss Group continues to present solid results in all key parameters. In the fourth quarter of 2017 sales grew a stellar 10.2 percent excluding FX translation, and net income rose by 34 percent. These excellent results were attained, among other things, by implementing strategic moves which enhanced the Group’s operational and managerial flexibility whilst focusing on core assets, by increasing our investment in innovation, signing new distribution agreements and expanding our geographical reach. Alongside the strong performance of Strauss Israel, Strauss Coffee and Strauss Water, 2017 was a challenging year for Sabra, our dips and spreads business in North America, which nevertheless succeeded in returning to close to pre-recall selling and market share levels».
2017 Highlights
- Organic sales growth, excluding foreign currency effects, was c8 percent. Shekel sales were NIS c8.5 billion compared to NIS 7.9 billion in the corresponding period last year; sales were impacted by a negative currency translation amounting to NIS c49 million as a result of the continued appreciation of the NIS in comparison to other currencies.
- Gross profit was NIS c3’116 million (c36.7 percent of sales), up c4.6 percent compared to the corresponding period last year. Gross margins were down c0.8 percent.
- Operating profit (Ebit) was NIS c780 million (c9.2 percent of sales), up c4.8 percent compared to the corresponding period last year. Ebit margins were down c0.2 percent.
- EPS for shareholders of the Company was NIS c3.7, up c18.8 percent compared to the corresponding period.
- Cash flow from operating activities totalled NIS c622 million, compared to NIS c762 million last year.
(1) Based on 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, including adjustments required for deferral of profit or loss from commodity derivatives until the inventory is sold to external parties, and other income and expenses, net, unless stated otherwise.
2017 Financial Highlights
| Non GAAP Figures (1) | 2017 | 2016 | Change |
| Total Group Sales (NIS mm) | 8’492 | 7’943 | 6.9% |
| Organic Sales Growth excluding FX | 8.0% | ||
| Gross Profit (NIS mm) | 3’116 | 2’980 | 4.6% |
| Gross Margins (%) | 36.7% | 37.5% | -80 bps |
| Ebitda (NIS mm) | 1’018 | 975 | 4.4% |
| Ebitda Margins (%) | 12.0% | 12.3% | -30 bps |
| Ebit (NIS mm) | 780 | 744 | 4.8% |
| Ebit Margins (%) | 9.2% | 9.4% | -20 bps |
| Net Income Attributable to the Company’s Shareholders (NIS mm) | 415 | 335 | 23.7% |
| Net Income Margin Attributable to the Company’s Shareholders (%) | 4.9% | 4.2% | +70 bps |
| EPS (NIS) | 3.70 | 3.12 | 18.8% |
| Operating Cash Flow (NIS mm) | 622 | 762 | -18.4% |
| Capex (NIS mm) (2) | -268 | -239 | 12.1% |
| Net debt (NIS mm) | 2’080 | 1’428 | 45.6% |
| Net debt / annual Ebitda | 2.0x | 1.5x | 0.5x |
.
(1) Based on 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, including adjustments required for deferral of profit or loss from commodity derivatives until the inventory is sold to external parties, and other income and expenses, net, unless stated otherwise.
(2) Investments include the acquisition of fixed assets and investment in intangibles.
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) for the year | 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 | 2’068 | 5.7% | 5.7% | 222 | 9 | 4.2% | 10.8% | -10 bps |
| Fun + Indulgence (2) | 1’063 | 5.6% | 5.6% | 106 | 5 | 5.8% | 10.0% | — |
| Total Strauss Israel | 3’131 | 5.6% | 5.6% | 328 | 14 | 4.5% | 10.5% | -10 bps |
| Strauss Coffee: | ||||||||
| Coffee Israel | 704 | 4.5% | 4.5% | 104 | 17 | 19.0% | 14.8% | +180 bps |
| International Coffee (2) | 3’396 | 13.2% | 12.4% | 289 | 17 | 6.4% | 8.5% | -60 bps |
| Total Strauss Coffee | 4’100 | 11.6% | 11.0% | 393 | 34 | 9.4% | 9.6% | -20 bps |
| International Dips + Spreads: | ||||||||
| Sabra (50%) (2) | 622 | -6.3% | 0.2% | 30 | -29 | -49.5% | 4.8% | -410 bps |
| Obela (50%) (2) | 70 | 32.8% | 23.9% | -11 | 1 | NM | NM | NM |
| Total International Dips + Spreads | 692 | -3.4% | 2.2% | 19 | -29 | -59.9% | 2.8% | -380 bps |
| Other (2) | 569 | -3.5% | 7.7% | 40 | 17 | 73.0% | 6.9% | +300 bps |
| Total Group | 8’492 | 6.9% | 8.0% | 780 | 36 | 4.8% | 9.2% | -20 bps |
.
(1) Based on 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, including adjustments required for deferral of profit or loss from commodity derivatives until the inventory is sold to external parties, and other income and expenses, net, unless stated otherwise.
(2) Fun + Indulgence figures include Strauss’s 50 percent share in the salty snacks business. International Coffee figures include Strauss’s 50 percent share in the Três Corações joint venture (3C) – Brazil – a company jointly held by the Group (50 percent) and by the local São Miguel Group (50 percent). International D+S figures reflect Strauss’s 50 percent share in Sabra and Obela. Other Operations figures include Strauss’s share in the joint venture in China, Haier Strauss Water (HSW). Until August the Company held a 34 percent stake in the joint venture, and commencing in September, its percentage holding increased to 49 percent following the acquisition of an additional 15 percent.
(3) During the period, the Group sold the Max Brenner operation.
Note: Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands. The figures for total International D+S were calculated on the basis of the exact Sabra and Obela figures in NIS thousands.
Q4-2017 Highlights (1)
- Organic sales growth, excluding foreign currency effects, was c10.2 percent. Shekel sales were NIS c2.2 billion compared to NIS 2 billion in the corresponding period last year, and include a NIS c53 million negative translation effect as a result of the weakening of the Brazilian Real versus the NIS.
- Gross profit was NIS c774 million (c35.9 percent of sales), up c8 percent compared to the corresponding period last year. Gross margins were up c0.6 percent.
- Operating profit (Ebit) was NIS c149 million (c6.9 percent of sales), up c10.4 percent compared to the corresponding period last year. Ebit margins were up c0.3 percent.
- EPS for shareholders of the company was NIS c0.67, up c26 percent compared to the corresponding period.
- Cash flows from operating activities totalled NIS c328 million, compared to NIS c360 million last year.
(1) Based on 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, including adjustments required for deferral of profit or loss from commodity derivatives until the inventory is sold to external parties, and other income and expenses, net, unless stated otherwise.
Q4-2017 Financial Highlights
| Non GAAP Figures (1) | Q4/2017 | Q4/2016 | Change |
| Total Group Sales (NIS mm) | 2’157 | 2’034 | 6.0% |
| Organic Sales Growth excluding FX | 10.2% | ||
| Gross Profit (NIS mm) | 774 | 717 | 8.0% |
| Gross Margins (%) | 35.9% | 35.3% | +60 bps |
| Ebitda (NIS mm) | 214 | 194 | 10.6% |
| Ebitda Margins (%) | 9.9% | 9.5% | +40 bps |
| Ebit (NIS mm) | 149 | 135 | 10.4% |
| Ebit Margins (%) | 6.9% | 6.6% | +30 bps |
| Net Income Attributable to the Company’s Shareholders (NIS mm) | 77 | 58 | 34.0% |
| Net Income Margin (Attributable to the Company’s Shareholders) (%) | 3.6% | 2.8% | +80 bps |
| EPS (NIS) | 0.67 | 0.53 | 26.0% |
| Operating Cash Flow (NIS mm) | 328 | 360 | -8.9% |
| Capex (NIS mm) (2) | -79 | -76 | 3.9% |
| Net debt (NIS mm) | 2’080 | 1’428 | 45.6% |
| Net debt / annual Ebitda | 2.0x | 1.5x | 0.5x |
.
(1) Based on 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, including adjustments required for deferral of profit or loss from commodity derivatives until the inventory is sold to external parties, and other income and expenses, net, unless stated otherwise.
(2) Investments include the acquisition of fixed assets and investment in intangibles.
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) for the 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 | 514 | 10.2% | 10.2% | 52 | 1 | 1.3% | 10.2% | -90 bps |
| Fun + Indulgence (2) | 254 | 13.6% | 13.6% | 17 | 2 | 23.5% | 6.9% | +60 bps |
| Total Strauss Israel | 768 | 11.3% | 11.3% | 69 | 3 | 5.1% | 9.0% | -60 bps |
| Strauss Coffee: | ||||||||
| Israel Coffee | 167 | 13.9% | 13.9% | 20 | 12 | 132.7% | 12.2% | +620 bps |
| International Coffee (2) | 918 | 0.4% | 5.3% | 59 | -17 | -21.8% | 6.4% | -190 bps |
| Total Strauss Coffee | 1’085 | 2.3% | 6.5% | 79 | -5 | -5.9% | 7.3% | -70 bps |
| International Dips + Spreads: | ||||||||
| Sabra (50%) (2) | 147 | 25.9% | 37.3% | -2 | 11 | 87.3% | NM | +1000 bps |
| Obela (50%) (2) | 21 | 13.0% | 20.1% | -2 | -1 | NM | NM | NM |
| Total International Dips + Spreads | 168 | 24.1% | 34.8% | -4 | 10 | 74.4% | NM | +830 bps |
| Other (2) | 136 | -8.4% | 9.5% | 5 | 6 | 451.2% | 3.0% | +380 bps |
| Total Group | 2’157 | 6.0% | 10.2% | 149 | 14 | 10.4% | 6.9% | +30 bps |
.
(1) Based on 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, including adjustments required for deferral of profit or loss from commodity derivatives until the inventory is sold to external parties, and other income and expenses, net, unless stated otherwise.
(2) Fun + Indulgence figures include Strauss’s 50 percent share in the salty snacks business. International Coffee figures include Strauss’s 50 percent share in the Três Corações joint venture (3C) – Brazil – a company jointly held by the Group (50 percent) and by the local São Miguel Group (50 percent). International D+S figures reflect Strauss’s 50 percent share in Sabra and Obela. Other Operations figures include Strauss’s share in the joint venture in China, Haier Strauss Water (HSW). Until August the Company held a 34 percent stake in the joint venture, and commencing in September, its percentage holding increased to 49 percent following the acquisition of an additional 15 percent.
(3) During the period, the Group sold the Max Brenner operation.
Note: Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands. The figures for total International D+S were calculated on the basis of the exact Sabra and Obela figures in NIS thousands.
Appendix
Condensed financial accounting (GAAP)
| Year | 2017 | 2016 | Change |
| Sales | 5’480 | 5’282 | 3.7% |
| Cost of sales excluding impact of commodity hedges | 3’323 | 3’179 | 4.5% |
| Adjustments for commodity hedges | 31 | 0 | |
| Cost of sales | 3’354 | 3’179 | 5.5% |
| Gross profit | 2’126 | 2’103 | 1.1% |
| % of sales | 38.8% | 39.8% | |
| Selling and marketing expenses | 1’259 | 1’234 | 2.0% |
| General and administrative expenses | 388 | 367 | 5.6% |
| Total expenses | 1’647 | 1’601 | |
| Share of profit of equity-accounted investees | 162 | 178 | -8.9% |
| Operating profit before other expenses | 641 | 680 | -5.7% |
| % of sales | 11.7% | 12.9% | |
| Other expenses, net | -9 | -49 | |
| Operating profit after other expenses | 632 | 631 | 0.3% |
| Financing expenses, net | -117 | -109 | 8.7% |
| Income before taxes on income | 515 | 522 | -1.5% |
| Taxes on income | -99 | -134 | -27.1% |
| Effective tax rate | 19.1% | 25.8% | |
| Income for the period | 416 | 388 | 7.4% |
| Attributable to the Company’s shareholders | 342 | 272 | 25.8% |
| Attributable to non-controlling interests | 74 | 116 | -35.6% |
.
Condensed financial accounting (GAAP)
| Fourth Quarter | 2017 | 2016 | Change |
| Sales | 1’385 | 1’310 | 5.7% |
| Cost of sales excluding impact of commodity hedges | 850 | 792 | 7.4% |
| Adjustments for commodity hedges | 13 | 28 | |
| Cost of sales | 863 | 820 | 5.3% |
| Gross profit | 522 | 490 | 6.4% |
| % of sales | 37.7% | 37.4% | |
| Selling and marketing expenses | 324 | 323 | 0.1% |
| General and administrative expenses | 113 | 98 | 15.1% |
| Total expenses | 437 | 421 | |
| Share of profit of equity-accounted investees | 42 | 24 | 78.9% |
| Operating profit before other expenses | 127 | 93 | 37.4% |
| % of sales | 9.2% | 7.0% | |
| Other expenses, net | -2 | -6 | |
| Operating profit after other expenses | 125 | 87 | 45.3% |
| Financing expenses, net | -27 | -16 | 78.5% |
| Income before taxes on income | 98 | 71 | 38.1% |
| Taxes on income | -22 | -15 | 40.9% |
| Effective tax rate | 22.1% | 21.7% | |
| Income for the period | 76 | 56 | 37.3% |
| Attributable to the Company’s shareholders | 68 | 30 | 128.6% |
| Attributable to non-controlling interests | 8 | 26 | -66.2% |
