Strauss Group: Net profit up 4 percent in 9M-2020

Petach Tikva / IL. (sg) Israel’s Strauss Group Limited generates revenue of NIS 6.3 billion in the first nine months of 2020, reflecting 4.5 percent organic growth excluding foreign currency effects. Net profit in the period was NIS 464 million, an increase of 4.1 percent. The Group’s Q3 sales totaled NIS 2.17 billion, reflecting 3.9 percent organic growth excluding foreign currency effects.

Strauss Group CEO, Giora Bardea: «Strauss Group continues to deliver robust business performance despite the substantial global impacts of the Covid-19 crisis on its activities. In the first nine months and third quarter of 2020 the company recorded an improvement, particularly in product categories suited to at-home consumption, while away-from-home (AFH) categories and channels weakened significantly, trends which grew stronger in the third quarter, among other things as a result of the second lockdown in Israel.

«Managerial stability, business diversity among categories, channels and markets, as well as financial strength, which improved significantly in the period under review, have enabled the company, which has learned to «live with Covid-19» and the accompanying complexities, to deliver organic sales growth, an improvement in the operating profit margin, and an increase in net profit.

«In the reporting period the Group continued to invest substantial resources in maintaining operational and business continuity, while making every effort to protect the health and safety of its employees across all sites worldwide. Looking ahead, the company continues to invest – and has even increased its investments – in the development of categories and business areas that have the potential for growth, including various dairy alternatives, health products, fresh foods, coffee capsules and entry to the POE (point of entry) market – a water treatment solution at the point of entry to homes and buildings – in China.

«Additionally, the Group has continued to invest in the development and upgrade of existing production lines and in the construction of new plants, including the water company’s manufacturing site in China, a modern warehouse and distribution center in Ukraine, Ta’am Hateva’s new production facility at Kibbutz Bror Hayil in Israel, and the completion of the acquisition of Mitsui’s coffee business in Brazil. The company’s financial strength, especially at this time, has enabled it to seek out business opportunities in Israel and other countries across a broad range of activities, with the aim of expanding its business. At the same time, the Group has persevered in its community investment, deepening it to support population groups harmed by the Covid crisis, and considers itself part of the effort to preserve social and economic resilience in all its countries of operations.

A month ago, with great pain and sorrow, we said goodbye to Michael Strauss, son of the founders of Strauss Group. Michael was a business leader and a moral and social compass to all people in the Group and to many in the Israeli economy. We mourn his passing and salute his great contribution to the development of Israel’s flourishing industry and economy.

Strauss Group concluded the period with solid results against the backdrop of numerous, diverse challenges, including the second lockdown in Israel, erosion of currencies against the shekel, and others. In its retail business the company delivered sales growth, particularly in product categories suited to at-home consumption, but in parallel, the closure of restaurants, hotels and cafés for extended periods as well as the drop in impulse purchases have negatively affected the Group’s sales in most companies, the coffee company in particular.

In total, Strauss Group delivered NIS 2.17 billion in revenue in the third quarter, while in the nine-month period revenue was NIS 6.3 billion, reflecting an increase of around 3.9 percent and 4.5 percent, respectively (organic, excluding FX), over last year. As a result of the weakening currencies, the company reported a drop of around 3.1 percent in revenue in the third quarter and of 2.2 percent in the nine months, compared to the corresponding periods last year.

The foreign currency effect on the company’s sales in the third quarter amounted to approximately NIS 163 million, of which NIS 136 million are the result of the depreciation of the Brazilian real against the shekel. In the first nine months of 2020 the foreign currency effect amounted to approximately NIS 429 million, of which NIS 351 million are due to the weakening of the real against the shekel. Operating profit was NIS 250 million, up 4.8 percent (excluding FX effects). On translation into shekels this reflects a drop of around 2.3 percent compared to the corresponding quarter last year. The operating profit (EBIT) margin was 11.5 percent, up 0.1 percent compared to the corresponding quarter.

Net profit (attributed to the shareholders of the company) was NIS 158 million in the third quarter compared to NIS 153 million in the corresponding period last year; the increase is the result of a decrease in financing and tax expenses. Net profit in the nine-month period was NIS 464 million, an increase of 4.1 percent compared to the first nine months of 2019.

Since the beginning of the year Strauss Group has donated over 80 thousand food parcels, and the company in Israel is currently helping thousands of families to buy food products, free of charge, as part of an initiative that began in September and will be maintained with those families through to the end of the year under the slogan «Doing Good Together». This is in addition to other efforts underway with numerous communities in Israel and around the world.

For additional information please read the Company’s PDF file below (152 KB):