Petach Tikva / IL. (sg) Israel’s Strauss Group Limited published its GAAP and non-GAAP financial statements for the first quarter of 2021. Similar to the results for FY 2020, the results for the current quarter were largely impacted by the Covid-19 pandemic, which transformed the patterns of our lives, the economy and consumption everywhere in the world. Like other international food corporations, the first quarter of 2020 was marked by increased consumption of food products as large parts of the world were subjected to lockdowns. By contrast, the first quarter of 2021 was marked by great variance – in some countries where the Group operates the impact of the pandemic had already declined, whereas in other regions, such as Europe and America, we continue to witness its effects on economic activity and consumption.
Despite the record sales in the first quarter last year, which were the result of a sharp temporary increase in March sales following the outbreak of coronavirus, Strauss Group’s revenues in Q1 2021 remained stable and amounted to approximately NIS 2.06 billion, reflecting an organic decrease (excluding foreign currency effects) of around 0.4 percent compared to the first quarter last year. The stability in sales was, on the one hand, the result of growth in Strauss Water’s revenues in Israel and in China and stable revenues in Strauss Israel and Strauss Coffee in local currency, and a decline in sales at Sabra in the US, largely as a result of the impacts of Covid-19.
Organic Ebit rose 11.8 percent and amounted to approximately NIS 289 million – 14.0 percent of revenues. The Company has concluded the first quarter with a net profit of approximately NIS 206 million to its shareholders, reflecting an organic increase of around 25.6 percent compared to the corresponding quarter in 2020 – 10.0 percent of revenues.
Excluding foreign currency effects and the profits of the investees in the Group’s incubator, organic growth in operating profit and net profit attributable to shareholders was 0.5 percent and 7.8 percent, respectively.
In the quarter, three of the companies in the Group’s FoodTech incubator, The Kitchen, completed funding rounds at an aggregate amount of approximately NIS 40 million. As a result of these rounds, in the current quarter the Company recognized gains on the decrease in holding rate and on loss of control, at a total of NIS 30 million. One of the companies, Flying SpArk, completed an IPO on the Tel Aviv Stock Exchange in the quarter. On March 31, 2021, the total value of the Company’s investments in the incubator investees on the financial statements was approximately NIS 44 million (according to the equity method). The fair value of these investments is around NIS 149 million.
In the first and second quarters, the prices of raw materials, spare parts and packaging materials used in manufacturing the Group’s products rose. Among others, the prices of green coffee (on global exchanges and in Brazil in particular) increased, as did the prices of sugar, raw milk (the «target price»), energy, plastic packaging, metals and others. Furthermore, sea freight costs rose sharply in this period, impacting all world trade.
In addition to the above, as a result of worldwide crises in the international transportation of goods, many companies are dealing with availability and production challenges. The company has defined the maintenance of business continuity and the regular functioning of its supply chain as a primary goal. The company is also monitoring the effects of the increase in the prices of the different inputs on its business and reviewing plans and courses of action, including product development and improvement, working capital management, operational and logistic efficiency enhancement, commodity price hedging policy, expansion and diversification of suppliers and raw materials, pricing policy, et cetera.
For additional information please read the Company’s PDF file below (114 KB):
20210525-STRAUSS-GROUP-Q1-2021.