Petach Tikva / IL. (sg) Israel’s Strauss Group Limited published its financial statements for the third quarter and the first nine months of 2021. The Group has maintained its growth momentum as Strauss Israel, Strauss Water and Strauss Coffee deliver solid revenue growth. The Group recorded NIS 52 million in profit from its FoodTech business. Net profit attributable to shareholders in the third quarter was NIS 204 million.
This week the international food and beverage company Strauss Group published its financial statements for the third quarter of 2021. The financial statements demonstrate that the Group has continued the growth momentum as in the past quarters, with revenues for the quarter amounting to NIS 2.3 billion, an increase of 6.9 percent compared to the corresponding period last year. Sales growth is evident in most of the company’s operations: Strauss’s activity in Israel, Strauss Water’s business, and the worldwide operations of Strauss Coffee. Sales of the dips and spreads company Sabra in the US were stable.
The data in this document are based on the company’s non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses and do not include share-based payment, mark-to-market at end-of-period of open positions in the Group in respect of financial derivatives used to hedge commodity prices and all adjustments necessary to delay recognition of gains and losses arising from commodity derivatives until the date when the inventory is sold to outside parties, other income and expenses, net, and the tax effect of excluding those items, unless stated otherwise.
Non GAAP figures thitd quarter 2021
| 2021 | 2020 | Change | |
| Total Group Sales (NIS mm) | 2,297 | 2,174 | 5.7% |
| Organic Sales Growth excluding FX | 6.9% | 3.9% | |
| Gross Profit (NIS mm) | 828 | 824 | 0.4% |
| Gross Margins (%) | 36.0% | 37.9% | -190 bps |
| Ebitda (NIS mm) | 389 | 339 | 14.5% |
| Ebitda Margins (%) | 16.9% | 15.6% | +130 bps |
| Ebit (NIS mm) | 300 | 250 | 20.0% |
| Ebit Margins (%) | 13.1% | 11.5% | +160 bps |
| Net Income Attributable to the Company’s Shareholders (NIS mm) | 204 | 158 | 28.1% |
| Net Income Margin (Attributable to the Company’s Shareholders) (%) | 8.9% | 7.3% | +160 bps |
| EPS (NIS) | 1.75 | 1.37 | 27.9% |
| Operating Cash Flow (NIS mm) | 304 | 183 | 66.0% |
| Capex (NIS mm) | 72 | 73 | -1.4% |
| Net debt (NIS mm) | 1,926 | 1,993 | -3.4% |
| Net debt / annual Ebitda | 1.4x | 1.6x | (0.2x) |
Strauss Group President + CEO, Giora Bardea: «Strauss is making strides in its growth journey while coping with the ongoing effects of the Covid-19 pandemic on world economy. Among other things, these effects are expressed in global increases in commodity prices, worldwide shipping and handling costs and industrial energy prices. Group management is working to preserve resilience and stability, while making investments to ensure that the company is well-aligned and will maintain its growth momentum in the future. This is reflected in the growth delivered by the Group in its core businesses, along with initial returns on its strategic investment in innovation and in the FoodTech industry, which had a positive effect on the Group’s profit in the quarter. ESG remains a core focus in our business and the Group is constantly improving its ESG scores. Together, these components will secure the Group’s continuing resilience and growth in the future».
Despite the rise in revenues, the company reported stability in gross profit, which amounted to NIS 828 million, and a slight drop in operating profit (before inclusion of the profits of the FoodTech incubator), which amounted to NIS 248 million. Erosion of the gross and operating margins is largely the result of the increase in raw material prices, notably green coffee and milk, as well as rising global manufacturing and shipping costs as part of the fallout as the world emerges from the pandemic. Strauss reported a 20 percent increase in operating profit, which rose to NIS 300 million, and a 28.1 percent increase in net profit, which was NIS 204 million. This increase is due to a gain of NIS 52 million recorded by the company in its FoodTech business, which is largely the result of the impressive funding round closed by cultured meat developer, Aleph Farms. Furthermore, the incubator was recently joined by a new startup active in the manufacture of cultured fish products.
Strauss Israel continued to grow its business and market share and ended the quarter with a 2.4 percent sales growth, bringing sales to NIS 976 million. In the third quarter, the food industry in Israel recorded a drop of 3.6 percent, meaning that Strauss increased its market share by 0.4 percentage points to 12.3 percent according to StoreNext. During the quarter, the company launched the ready-to-heat frozen meals category (under the «Delicious» brand), the oat-based «Not Milk» drink, delivering innovation in the plant-based milk category, and the XXTRA Flamin’ Hot Doritos and Cheetos snack food series. The company improved its operating margin due to sales growth and operating cost savings. Sales growth largely originated in the dairy and dairy alternative product category as well as the salty snack category. The salads category remained stable, whereas confectionery sales dropped compared to the corresponding period last year, among other things due to the timing of the Jewish high holidays, which this year fell entirely in September.
In the third quarter, Strauss Coffee’s business was marked by rising world green coffee prices, which increased at higher rates compared to the corresponding period, among other things due to freak frost that damaged coffee plantations in various Brazilian states. Following the increase in the cost of green coffee, retail coffee prices were revised in Brazil (Três Corações (JV)). The company in Brazil also delivered growth in quantities sold, and in total, reported a 37.1 percent sales growth in local currency. However, the joint venture’s gross and operating margins eroded. In Israel, the coffee business experienced a slight drop of 1.7 percent in sales due to the timing of the holidays in September. During the quarter, the coffee company launched its new aluminum capsules as well as the new Turkish Coffee «Tastes of the Market» limited edition offering – Galilee and Jerusalem – containing exotic blends of spices and herbs. The coffee business in Eastern Europe was marked by stability, with a slight drop in sales in Russia and Ukraine. In the third quarter and in the months of October and November, prices were raised in Ukraine, Romania, Serbia and Poland.
Strauss Water continued to grow with sales rising by 4.9 percent to approximately NIS 192 million. The company, which in the past quarter launched its new tami4edge water bar, has reported growth in both the number of customers and in the number of new appliances sold. The water business in China (Haier Strauss Water (HSW)), where the fight against Covid-19 continues, grew 8.9 percent in the third quarter.
Sabra, which has experienced challenges posed by the effects of the pandemic, reported a slight recovery in sales and moderate growth of 1.3 percent in the third quarter in local currency, with sales increasing to USD 97 million along with market share growth compared to the corresponding period last year. However, the company reported that its operating profit declined by 26 percent as a result of rising raw material prices, manufacturing and shipping costs.
The data in this document are based on the company’s non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses and do not include share-based payment, mark-to-market at end-of-period of open positions in the Group in respect of financial derivatives used to hedge commodity prices and all adjustments necessary to delay recognition of gains and losses arising from commodity derivatives until the date when the inventory is sold to outside parties, other income and expenses, net, and the tax effect of excluding those items, unless stated otherwise.
Non GAAP figures first nine months 2021
| 2021 | 2020 | Change | |
| Total Group Sales (NIS mm) | 6,490 | 6,280 | 3.3% |
| Organic Sales Growth excluding FX | 5.6% | 4.5% | |
| Gross Profit (NIS mm) | 2,435 | 2,445 | -0.4% |
| Gross Margins (%) | 37.5% | 38.9% | -140 bps |
| Ebitda (NIS mm) | 1,058 | 1,002 | 5.5% |
| Ebitda Margins (%) | 16.3% | 16.0% | +30 bps |
| Ebit (NIS mm) | 801 | 741 | 8.0% |
| Ebit Margins (%) | 12.3% | 11.8% | +50 bps |
| Net Income Attributable to the Company’s Shareholders (NIS mm) | 536 | 464 | 15.4% |
| Net Income Margin (Attributable to the Company’s Shareholders) (%) | 8.3% | 7.4% | +90 bps |
| EPS (NIS) | 4.61 | 4.01 | 15.1% |
| Operating Cash Flow (NIS mm) | 612 | 581 | 5.3% |
| Capex (NIS mm) | 199 | 206 | -3.4% |
| Net debt (NIS mm) | 1,926 | 1,993 | -3.4% |
| Net debt / annual Ebitda | 1.4x | 1.6x | (0.2x) |
