Petach Tikva / IL. (sg) Israel’s Strauss Group Limited published its financial statements for the first quarter of 2023, in which the Group delivered 12.4 percent revenue growth (7.9 percent growth excluding foreign currency effects). The Group’s revenues were NIS 2.554 billion, and revenue growth is the result of ongoing growth in the international coffee business and growth in the business in Israel.
The Group’s gross profit was NIS 837 million, reflecting a profit margin of 32.8 percent, and operating profit was NIS 208 million, 8.1 percent operating profit margin. Profit margins continue to erode due to rising inflation and higher raw material prices. Net income attributable to shareholders was NIS 134 million.
Strauss Group CEO Shai Babad: «Strauss experienced growth across most of its businesses, with an improvement in market shares and revenue growth. However, the need to cope with rising raw material costs and inflation led to a significant decline in the Group’s margins overall, most notably in Israel, while the price increases by the Group offered only partial compensation. We are making progress in implementing our strategic plans and driving further growth, strengthening and expanding our partnerships, optimizing our portfolio, and are focused on significant plans designed to improve productivity.»
Segment Overview
Strauss Israel delivered revenues of NIS 1.049 billion in the quarter, reflecting 7.6 percent growth compared to the corresponding period last year. Strauss Israel’s profit for the quarter eroded due to input inflation and the weakening of the Shekel. Operating profit was NIS 109 million.
The Company’s market shares in Israel in the dairy, fresh foods and Yad Mordechai categories rose in the first quarter of the year. Sales of the Health + Wellness segment were NIS 743 million, up 11.1 percent, and operating profit was NIS 85 million. The Company continues to develop the production site for the plant-based dairy alternative manufacturing facility in Achihud.
The confectionery business continued to recover, and its market share reached 21.6 percent in the first quarter of 2023 compared to 28.7 percent in the first quarter of 2022. The Fun + Indulgence segment’s revenues were NIS 306 million, with operating profit amounting to NIS 24 million.
Strauss Coffee delivered another quarter of growth, with revenues of NIS 1.189 billion and 10.0 percent organic growth across all countries of operations. In Israel, coffee revenues totaled NIS 238 million, up 10.6 percent compared to the corresponding period, and operating profit was NIS 39 million. In Brazil, 11.1 percent sales growth was achieved (0.9 percent organic growth), with sales rising to NIS 621 million. The coffee company Três Corações’s market share grew, and the company currently accounts for 33.6 percent of the roast and ground coffee market in Brazil, compared to 32.4 percent in the first quarter of 2022. The businesses in Europe also delivered sales growth.
Sabra maintained the course of gradual recovery following the implementation of the adjustment plan at the plant in Virginia. The company, whose business was largely shut down last year, has resumed full-capacity production, and reached a market share of 38.8 percent (as of the publication date of the report) of the US hummus market. Sabra’s sales in the first quarter were NIS 106 million (for 50 percent ownership) – an organic decline of 1.3 percent compared to last year, and the operating loss was NIS 1 million (50 percent ownership).
Strauss Water continued to grow in the first quarter with revenues of NIS 188 million, up 2.9 percent compared to last year, largely the result of ongoing growth in the customer base. The water business in China also grew organically, by 8.7 percent.
The Kitchen FoodTech Hub: The number of portfolio companies in the incubator is presently 24. As of March 31, 2023, the total value of investments in the portfolio startups, which are presented in the financial statements according to the equity method, was NIS 120 million. The fair value of these investments on the same date was NIS 582 million, compared to NIS 412 million on March 31, 2022.
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