G. Willi-Food Reports Q2 2012 Sales Down 5.4% from Q2 2011 Net Income of US$ 1 million in Q2 2012

YAVNE, Israel, August 15, 2012 /PRNewswire/ --

G. Willi-Food International Ltd. (NASDAQ: WILC) (the "Company" or "Willi-Food"), a global company specializing in the development, marketing and international distribution of kosher foods, today announced its unaudited financial results for the second quarter and the six-months ended June 30, 2012.

Second Quarter Fiscal 2012 Highlights

  • Sales decreased 5.4% from second quarter of 2011 to NIS 66.3 million (US$ 16.9 million)
  • Gross profit decreased 21.2% from second quarter of 2011 to NIS 16.5 million (US$ 4.2 million), or 24.9% of sales
  • Operating income decreased 47.9% from second quarter of 2011 to NIS 5.5 million (US$ 1.4 million), or 8.4% of sales
  • Net income decreased 43.8% from second quarter of 2011 to NIS 4.1 million (US$ 1.0 million), or 6.2% of sales
  • Cash and securities balance of NIS 203.7 million (US$ 51.9 million) as of June 30, 2012

Willi-Food's operating divisions include Willi-Food, a distributor of a broad variety of kosher foods, and its wholly-owned Gold Frost, a designer, developer and distributor of branded kosher dairy food products.

Second Quarter Fiscal 2012 Summary

Sales for the second quarter of 2012 decreased by 5.4% to NIS 66.3 million (US$ 16.9 million) from NIS 70.1 million (US$ 17.9 million) recorded in the second quarter of 2011. The decline in sales in the second quarter of 2012 was a result of the timing of the Passover festival that it sells fell during the first quarter this year, while last year it sales fell during the second quarter.

Gross profit for the second quarter of 2012 decreased by 21.2% to NIS 16.5 million (US$ 4.2 million) compared to NIS 21.0 million (US$ 5.4 million) recorded in the second quarter of 2011. Second quarter gross margin was 24.9% compared to gross margin of 29.9% for the same period in 2011. The decrease in gross profit and gross margins was primarily due to reductions in the prices of certain of our products as a result of the ongoing national protest against the cost of food products and continued pressure from our customers to reduce prices and due to an increase in global prices of food products compounded by the recent strengthening of the U.S. dollar versus the NIS (which depreciated 5.6% in the second quarter of 2012) and the continued effects of the global economic recession.

Willi-Food's operating income for the second quarter of 2012 decreased by 47.9% to NIS 5.5 million (US$ 1.4 million) compared to NIS 10.7 million (US$ 2.7 million) recorded in the second quarter of 2011. Selling expenses increased by 12.7% from the comparable quarter of 2011, primarily due to increase in advertising and promotion expenses. Selling expenses as a percentage of sales increased in the second quarter of 2012 to 10.5% compared to 8.8% in the second quarter of 2011. General and administrative expenses decreased by 7.8% from the comparable quarter of 2011, primarily due to a decrease in management profit-related bonuses. General and administrative expenses as a percentage of sales decreased in the second quarter of 2011 to 6.0% from 6.2% in the second quarter of 2011.

Willi-Food's income before taxes for the second quarter of 2012 decreased by 36.2% to NIS 5.4 million (US$ 1.4 million) compared to NIS 8.5 million (US$ 2.2 million) recorded in the second quarter of 2011. Willi-Food's profit from continuing operations for the second quarter of 2012 decreased by 38.6% to NIS 4.1 million (US$ 1.0 million) from NIS 6.7 million (US$ 1.7 million) recorded in the second quarter of 2011.

Willi-Food's net income in the second quarter of 2012 decreased by 43.8% to NIS 4.1 million (US$ 1.0 million) from NIS 7.3 million (US$ 1.9 million) recorded in the second quarter of 2011. Willi-Food's net income attributed to the owners of the Company in the second quarter of 2012 decreased 41.2% to NIS 4.1 million (US$ 1.0 million), or NIS 0.32 (US$ 0.08) per share, compared to NIS 7.0 million (US$ 1.8 million), or NIS 0.51 (US$ 0.13) per share, recorded in the second quarter of 2011.

Willi-Food generated NIS 8.7 million (US$ 2.2 million), or NIS 0.67 (US$ 0.17) per share from continuing operating activities in the second quarter of 2012.

Willi-Food ended the second quarter of 2012 with NIS 203.7 million (US$ 51.9 million) in cash and securities and with no short-term debt. Willi-Food's shareholders' equity at the end of June 2012 was NIS 318.5 million (US$ 81.2 million).

Six-Month Results

Willi-Food's sales for the six-month period ending June 30, 2012 decreased by 0.4% to NIS 140.0 million (US$ 35.7 million) compared to sales of NIS 140.5 million (US$ 35.8 million) in the first half of 2011. Gross profit for the period decreased by 17.4% to NIS 32.2 million (US$ 8.2 million) compared to gross profit of NIS 39.0 million (US$ 9.9 million) for the first half of 2011. First half gross margins in 2012 were 23.0% compared to gross margins of 27.7% in the same period of 2011.

Operating income for the first half of 2012 decreased by 39.5% to NIS 10.3 million (US$ 2.6 million) from NIS 17.0 million (US$ 4.3 million) reported in the comparable period of last year.  First half 2012 income before taxes decreased by 26.7% to NIS 12.0 million (US$ 3.0 million) compared to NIS 16.3 million (US$ 4.2 million) recorded in the first half of 2011. Net income for the first half of 2012 decreased by 33.7% to NIS 8.9 million (US$ 2.3 million) from NIS 13.5 million (US$ 3.4 million) in the first half of 2011. Net income attributable to the owners of the Company for the first half of 2012 decreased by 31.4% to NIS 8.9 million (US$ 2.3 million), or NIS 0.69 (US$ 0.18) per share compared to net income attributable to the owners of the Company for the first half of 2011 of NIS 13.0 million (US$ 3.3 million), or NIS 0.96 (US$ 0.24) per share.

Business Outlook

Mr. Zwi Williger, Chairman of Willi-Food commented, "As with the second half of 2011 and the first quarter of 2012, second quarter 2012 results were affected by continued consumer pressure to reduce prices which accordingly, caused us to reduce the prices of some of our products. The actions taken in the recent quarters, by way of price reductions, resulted in a decrease of our profitability. Our results were also affected by the depreciation of the NIS versus the U.S. dollar by more than 5% in the second quarter. Going forward, we anticipate a significant increase in the level of uncertainty in the global economy and in particular - challenges pertaining to food commodities that exceeded global inflation rates. In Israel, economic uncertainty coupled with ongoing consumer demand for price reductions will not enable us to increase prices even with the global price increase of food products and the U.S. dollar strengthening."

Mr. Williger concluded, "In light of the anticipated continued depreciation of the NIS and the global price increase of food products, our foreseeable challenges ahead will be to manage our expenses and in particular the cost of our products in order to accommodate our customers' continued anticipated desire to acquire lower cost products. However, we believe that this period presents us with an opportunity utilize our cash on hand to acquire synergetic companies at prices lower than before. We continue to look for opportunities to create additional value for our shareholders."  

Conference Call

The Company will host a conference call to discuss results on Wedensday, August 15, 2012 at 11:00 AM Eastern time. Interested parties may participate in the conference call by dialing 1-877-941-8416 (US), or 1-480-629-9808 (International), approximately 10 minutes prior to the scheduled start time. Interested parties can also listen via a live Internet webcast, which will be available on the day of the call through the following link:

http://public.viavid.com/index.php?id=101412

A replay of the conference call will be available for 14 days from 2:00 PM EST on August 15, 2012 through 11:59 PM EST on August 29, 2012 by dialing 1-877-870-5176 (US), or 1-858-384-5517 (International), access code 4558985.  In addition, a recording of the call will be available via the following link for one year:

http://public.viavid.com/reports/eventparticipantreporttab.php?id=o5ajo5iZ

NOTE A: Convenience Translation to Dollars

The convenience translation of New Israeli Shekels (NIS) into U.S. dollars was made at the rate of exchange prevailing on June 30, 2012, U.S. $1.00 equals NIS 3.923. The translation was made solely for the convenience of the reader.

NOTE B: IFRS

The Company's consolidated financial results for the three-month and six-month ended June 30, 2012 are presented in accordance with International Financial Reporting Standards ("IFRS").

NOTE C: Discontinued Operations

Discontinued operations are measured and presented in accordance with the provisions of IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations". The results of discontinued operations are presented in the income statement in a separate item below income from continuing operations.

About G. Willi-Food International Ltd.

G. Willi-Food International Ltd. (http://www.willi-food.com) is an Israeli-based company specializing in high-quality, great-tasting kosher food products. Willi-Food is engaged directly and through its subsidiaries in the design, import, marketing and distribution of over 600 food products worldwide. As one of Israel's leading food importers, Willi-Food markets and sells its food products to over 1,500 customers in Israel and around the world including large retail and private supermarket chains, wholesalers and institutional consumers. The company's operating divisions include Willi-Food in Israel and Gold Frost, a wholly owned subsidiary who designs, develops and distributes branded kosher, dairy-food products.

This press release contains forward-looking statements within the meaning of safe harbor provisions of the Private Securities Litigation Reform Act of 1995 relating to future events or our future performance, such as statements regarding trends, demand for our products and expected sales, operating results, and earnings. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in those forward-looking statements. These risks and other factors include but are not limited to: monetary risks including changes in marketable securities or changes in currency exchange rates- especially the NIS/U.S. Dollar exchange rate, payment default by any of our major clients, the loss of one of more of our key personnel, changes in laws and regulations, including those relating to the food distribution industry, and inability to meet and maintain regulatory qualifications and approvals for our products, termination of arrangements with our suppliers, in particular Arla Foods, loss of one or more of our principal clients, increase or decrease in global purchase prices of food products, increasing levels of competition in Israel and other markets in which we do business, changes in economic conditions in Israel, including in particular economic conditions in the Company's core markets, our inability to accurately predict consumption of our products, our inability to anticipate changes in consumer preferences, insurance coverage not sufficient enough to cover losses of product liability claims and risks associated with product liability claims. We cannot guarantee future results, levels of activity, performance or achievements. The matters discussed in this press release also involve risks and uncertainties summarized under the heading "Risk Factors" in the Company's Annual Report on Form 20-F for the year ended December 31, 2011, filed with the Securities and Exchange Commission on April 30, 2012. These factors are updated from time to time through the filing of reports and registration statements with the Securities and Exchange Commission. We do not assume any obligation to update the forward-looking information contained in this press release.

 


G. WILLI-FOOD INTERNATIONAL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

                                                                        December
                                      June 30,  December 31,   June 30,     31,
                                         2012        2011        2012     2011
                                             NIS            U.S. dollars (*)
                                                  (in thousands)
    ASSETS
 
    Current assets
    Cash and cash equivalents          72,804       34,661    18,558     8,835
    Financial assets carried at
    fair value through profit or
    loss                              130,935      163,430    33,376    41,659
    Trade receivables                  65,968       57,628    16,816    14,690
    Other receivables and prepaid
    expenses                            4,250       15,720     1,082     4,007
    Inventories                        32,981       32,613     8,408     8,313
    Current tax assets                    774            -       197         -
    Total current assets              307,712      304,052    78,437    77,504
 
    Non-current assets
    Property, plant and equipment      61,078       61,401    15,569    15,652
    Less -Accumulated depreciation     20,270       18,856     5,167     4,807
                                       40,808       42,545    10,402    10,845
 
    Prepaid expenses                      102          117        26        30
    Goodwill                               35           36         9         9
    Deferred taxes                      1,185          933       302       238
    Total non-current assets           42,130       43,631    10,739    11,122
 
                                      349,842      347,683    89,176    88,626
    EQUITY AND LIABILITIES
 
    Current liabilities
    Trade payables                     25,210       25,683     6,426     6,547
    Provisions                            958        1,164       244       297
    Current tax liabilities                 -        3,837         -       978
    Other payables and accrued
    expenses                            3,179        4,551       810     1,160
    Employees Benefits                  1,531        1,613       390       411
    Total current liabilities          30,878       36,848     7,870     9,393
 
    Non-current liabilities
    Employees Benefits                    429          518       109       132
    Total non-current liabilities         429          518       109       132
 
    Shareholders' equity
    Share capital NIS 0.10 par
    value
    (authorized - 50,000,000
    shares, issued and outstanding
    - 12,974,245 shares at June 30,
    2012; 13,020,360 shares at
    December 31, 2011)                  1,444        1,444       368       368
    Additional paid in capital        129,856      129,809    33,101    33,089
    Capital fund                          247          247        63        63
    Foreign currency translation
    reserve                               533          587       136       150
    Treasury shares                  (10,843)     (10,141)   (2,764)   (2,586)
    Retained earnings                 197,298      188,371    50,293    48,017
                                      318,535      310,317    81,197    79,101
 
                                      349,842      347,683    89,176    88,626


(*)    Convenience translation into U.S. dollars

G. WILLI-FOOD INTERNATIONAL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

                       Six months           Three months              Six months
                                   ended June 30,                   ended June 30,
                          2012       2011        2012       2011      2012       2011
                                        NIS                        U.S. dollars (*)
                              In thousands (except per share and share data)
 
    Sales              139,984     140,528     66,333     70,135     35,683     35,822
    Cost of sales      107,764     101,543     49,789     49,136     27,470     25,884
 
    Gross profit        32,220      38,985     16,544     20,999      8,213      9,938
 
    Selling
    expenses            13,883      12,993      6,986      6,201      3,539      3,312
    General and
    administrative
    expenses             8,109       9,219      3,989      4,326      2,067      2,350
    Other income          (47)       (215)         19      (181)       (12)       (55)
 
    Total operating
    expenses            21,945      21,997     10,994     10,346      5,594      5,607
 
    Operating
    income              10,275      16,988      5,550     10,653      2,619      4,331
 
    Financial
    income               1,734       (360)      (280)    (2,086)        442       (92)
    Financial
    expense                 55         324      (133)        105         14         83
 
    Income before
    taxes on income     11,954      16,304      5,403      8,462      3,047      4,156
    Taxes on income      3,027       3,763      1,304      1,784        771        959
 
    Income from
    continuing
    operations           8,927      12,541      4,099      6,678      2,276      3,197
    Income from
    discontinued
    operations               -         932          -        620          -        237
 
    Net income           8,927      13,473      4,099      7,298      2,276      3,434
 
    Owners of the
    Company              8,927      13,017      4,099      6,975      2,276      3,318
    Non-controlling
    interest                 -         456          -        323          -        116
 
    Net income           8,927      13,473      4,099      7,298      2,276      3,434
 
    Earnings per
    share data:
    Earnings per
    share:
    Basic from
    continuing
    operations            0.69        0.92       0.32       0.49       0.18       0.23
    Basic from
    discontinued
    operations               -        0.04          -       0.02          -       0.01
    Basic                 0.69        0.96       0.32       0.51       0.18       0.24
    Diluted from
    continuing
    operations            0.69        0.92       0.32       0.49       0.18       0.23
    Diluted from
    discontinued
    operations               -        0.04          -       0.02          -       0.01
    Diluted               0.69        0.96       0.32       0.51       0.18       0.24
 
    Shares used in
    computing basic
    and diluted
    earnings per
    ordinary share: 12,980,550  13,573,679 12,974,245 13,573,679 12,980,550 13,573,679
 


    (*) Convenience translation into
    U.S. dollars
 


G. WILLI-FOOD INTERNATIONAL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

                             Six months       Three months      Six months
                                    ended June 30,            ended June 30,
                              2012    2011    2012      2011     2012    2011
                                         NIS                 U.S. dollars (*)
                                             (in thousands)
    Cash flows -
    operating activities
    Profit from
    continuing operations    8,927   12,541   4,099    6,678    2,276    3,197
    Adjustments to
    reconcile net income
    to net cash from
    continuing operating
    activities (Appendix)  (15,192)  (2,585)  4,601    3,220   (3,873)    (658)
 
    Net cash from
    continuing operating
    activities              (6,265)   9,956   8,700    9,898   (1,597)   2,539
    Net cash from (used
    in) discontinued
    operating activities         -      252       -     (435)       -       64
 
    Cash flows -
    investing activities
    Long term deposit,
    net                          -      (50)      -      (50)       -      (13)
    Acquisition of
    property plant and
    equipment                 (199)    (355)     82       (7)     (51)     (90)
    Proceeds from sale of
    property plant and
    Equipment                   42      214      42       68       11       55
    Additions to prepaid
    expenses, net                -        -       -       13        -        -
    Proceeds from
    disposal of
    subsidiary              13,500        -       -        -    3,441        -
    Proceeds from (used
    in) purchase of
    marketable
    securities, net         31,767  (58,602) 24,128  (54,159)   8,098  (14,938)
    Net cash from (used
    in) continuing
    investing activities    45,110  (58,793) 24,252  (54,135)  11,499  (14,986)
 
    Net cash used in
    discontinued
    investing activities         -   (1,269)      -     (429)       -     (324)
 
    Cash flows -
    financing activities
    Investment in
    treasury stocks           (702)       -       -        -     (179)       -
    Short-term bank
    credit, net                  -        -       -      738        -        -
 
    Net cash from (used
    in) continuing
    financing activities      (702)       -       -      738     (179)       -
    Net cash from
    discontinued
    financing activities         -    1,904       -    1,751        -      485
 
    Increase (decrease)
    in cash and cash
    equivalents             38,143  (47,950) 32,952  (42,612)   9,723  (12,222)
 
    Cash and cash
    equivalents at the
    beginning of the
    financial year          34,661  113,631  39,852  108,293    8,835   28,965
 
    Cash and cash
    equivalents of the
    end of the financial
    year                    72,804   65,681  72,804   65,681   18,558   16,743


 


(*)    Convenience Translation into U.S. Dollars.


G. WILLI-FOOD INTERNATIONAL LTD.

APPENDIX TO CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Adjustments to reconcile net income to net cash from operating activities

                               Six months     Three months      Six months
                                     Ended June 30,           Ended June 30,
                                2012    2011   2012    2011     2012     2011
                                          NIS                U.S. dollars (*)
                                              (in thousands)
 
    CASH FLOWS - INVESTING
    ACTIVITIES
 
    Deferred income taxes       (252) (1,119)   (439)   (985)     (65)    (285)
    Unrealized loss on
    marketable securities        728   3,294   1,596   3,252      185      840
    Depreciation and
    amortization               1,971   1,587   1,098     897      502      405
    Capital loss (gain) on
    disposal of property
    plant and equipment          (60)   (214)      6    (214)     (15)     (55)
    Employees benefit, net       (89)      -    (212)      4      (23)       -
    Stock based
    compensation reserve          47       -      10       -       12        -
 
    Changes in assets and
    liabilities:
    Decrease (increase) in
    trade receivables and
    other receivables        (11,198) (2,916)  5,916   1,528   (2,854)    (743)
    Decrease (increase) in
    inventories                 (368) (4,306)  1,152   1,487      (93)  (1,098)
    Increase (decrease) in
    trade and other
    payables, and other
    current liabilities       (5,971)  1,089  (4,526) (2,749)  (1,522)     278
 
                             (15,192) (2,585)  4,601   3,220   (3,873)    (658)
 


(*)    Convenience Translation into U.S. Dollars.

This information is intended to be reviewed in conjunction with the Company's filings with the Securities and Exchange Commission.


Company Contact:
G. Willi Food International Ltd.
Baruch Shusel, CFO
(+972) 8-932-1000
baruch@willi-food.co.il


SOURCE G. Willi-Food International Ltd.



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