Strauss Group posts 1.3% organic sales growth, excluding foreign currency effects(1), and net profit erosion(2)

Aug 20, 2015, 01:03 ET from Strauss Group

PETACH TIKVA, Israel, Aug. 20, 2015 /PRNewswire/ -- Gadi Lesin, President and Chief Executive Officer of Strauss Group (STRS.TA), said today (August 20, 2015): "A combination of macroeconomic events in several companies and regions and a number of specific events (recall of hummus cases by Sabra in the US, the debt settlement with Mega Retail in Israel and an impairment provision in Serbia) have led to erosion of the Group's operating and net profit, compared to a strong corresponding quarter. The Group is implementing streamlining measures along the entire value chain, including production, supply chain and cost cutting at the corporate center. In parallel, the Group continues to implement its global expansion strategy, which includes completion of the restructuring of the Haier Strauss Water joint venture in China and the continued development of the TRES solution, under which Tres Coracoes joint venture in Brazil(3) is active in the single portion multi-beverage machines and capsules segment."

Link to MD&A report

Link to Analyst Presentation

Link to Q2'15 conference call details

H1 2015 highlights (2)

  • Organic sales growth, excluding the foreign exchange effects, was 1.3% (1). Shekel sales were NIS 3.8 billion compared to NIS 3.9 billion in the corresponding quarter last year, and reflected NIS 185 million negative translation differences as a result of the continued strengthening of the NIS versus other functional currencies of the Group.
  • Gross profit was NIS 1,418 million (37.6% of sales), down 9.0% compared to the corresponding period last year. Gross margins were down 2.1%.
  • Operating profit (EBIT) was NIS 309 million (8.2% of sales), down 17.9% compared to the corresponding quarter last year. EBIT margins were down 1.4%.
  • EPS for shareholders of the company was NIS 1.24 per share, down 21.2% compared to the corresponding period.
  • Cash flows from operating activities totaled NIS 30 million, compared to NIS 128 million last year.

 

(1)

Also excluding the impact of classification of costs following the introduction of the Food Law, as explained in the Board of Directors Report.



(2)

Based on non-GAAP data, which include the proportionate consolidation of jointly-held partnerships (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period and other income and expenses, unless stated otherwise.



(3)

Tres Coracoes (3C) – Brazil – a company jointly held by the Group (50%) and by a local holding company, Sao Miguel Holding e Investimentos S.A. (50%).

 

Non GAAP Adjusted Figures (1)







First Half


2015

2014

Change

Organic Sales Growth
excluding FX and Food Law

Total Group Sales (NIS mm)

3,769

3,922

-3.9%

1.3%

Gross Profit (NIS mm)

1,418

1,558

-9.0%


Gross Margins (%)

37.6%

39.7%

 -210 bps


EBITDA (NIS mm)

425

485

-12.3%


EBITDA Margins (%)

11.3%

12.4%

 -110 bps


EBIT (NIS mm)

309

376

-17.9%


EBIT Margins (%)

8.2%

9.6%

 -140 bps


Net Income Attributable to the Company's Shareholders (NIS mm)

133

168

-20.6%


Net Income Margin Attributable to the Company's Shareholders (%)

3.5%

4.3%

 -80 bps


EPS (NIS)

1.24

1.57

-21.0%


Operating Cash Flow (NIS mm)

30

128

-76.6%


Capex (NIS mm) (2)

(157)

(257)

-38.9%


Net debt (NIS mm)

1,833

1,720

6.6%


Net debt / annual EBITDA

2.0x

1.8x

0.3x







(1)

Based on non-GAAP data, which include the proportionate consolidation of jointly-held partnerships (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period and other income and expenses, unless stated otherwise.



(2)

Investments include the acquisition of fixed assets and investment in intangibles and deferred expenses.



Note: Financial data were rounded off to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands.

 

Non GAAP Adjusted Figures (1)











First Half


Sales (NIS
mm)

Sales
Growth vs.
Last Year

Organic
Sales
Growth
excluding
FX and
Food Law

EBIT (NIS
mm)

NIS
Change in
EBIT

% Change
in EBIT 

EBIT margins

Change in
EBIT
margins vs.
2014

Sales and EBIT by Operating Segments and Activities









Strauss Israel:









Health & Wellness

928

-5.2%

-3.3%

78

(22)

-21.3%

8.4%

 -170 bps

Fun & Indulgence (2)

503

-4.2%

-1.7%

58

(8)

-12.0%

11.6%

 -100 bps

Total Strauss Israel

1,431

-4.8%

-2.7%

136

(30)

-17.6%

9.5%

 -150 bps










Strauss Coffee:









Coffee Israel 

333

-6.4%

-3.5%

46

(8)

-12.8%

14.0%

 -100 bps

International Coffee (2)

1,348

-5.0%

11.4%

90

(35)

-28.9%

6.6%

 -230 bps

Total Strauss Coffee

1,681

-5.2%

7.9%

136

(43)

-24.1%

8.1%

 -200 bps










International Dips & Spreads:









Sabra (50%) (2)

347

14.0%

1.4%

34

(8)

-19.9%

9.7%

 -410 bps

Obela (50%) (2)

17

7.6%

12.4%

(11)

(1)

NM

NM

NM

Total International Dips & Spreads

364

13.7%

1.9%

23

(9)

-28.3%

6.3%

 -370 bps










Other (2)

293

-9.8%

-12.8%

14

15

-2282.0%

4.6%

+480 bps

Total Group

3,769

-3.9%

1.3%

309

(67)

-17.9%

8.2%

 -140 bps










(1)

Based on non-GAAP data, which include the proportionate consolidation of jointly-held partnerships (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period and other income and expenses, unless stated otherwise.



(2)

Fun & Indulgence figures include Strauss 50% share in the salty snacks business. International Coffee figures include Strauss 50% share in Tres Coracoes Joint Venture (3C) – Brazil - a company jointly held by the Group (50%) and by the Sao Miguel Group (50%). International D&S figures reflect Strauss 50% share in Sabra and Obela. Other includes Strauss share in Strauss Water China.



Note: Financial data were rounded off to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands.

 

Q2 2015 highlights (1)

  • Organic sales growth, excluding the foreign exchange effects, was 0.6% (2). Shekel sales were NIS 1.8 billion compared to NIS 1.9 billion in the corresponding quarter last year, and reflected NIS 118 million negative translation differences as a result of the continued strengthening of the NIS versus other functional currencies of the Group.
  • Gross profit was NIS 689 million (37.4% of sales), down 10.5% compared to the corresponding period last year. Gross margins were down 2.0%.
  • Operating profit (EBIT) was NIS 112 million (6.1% of sales), down 35.3% compared to the corresponding quarter last year. EBIT margins were down 2.8%.
  • EPS for shareholders of the company was NIS 0.29 per share, down 54.3% compared to the corresponding period.
  • Cash flows from operating activities totaled NIS 180 million, compared to NIS 113 million last year.

 

(1)

Based on non-GAAP data, which include the proportionate consolidation of jointly-held partnerships (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period and other income and expenses, unless stated otherwise.



(2)

Also excluding the impact of classification of costs following the introduction of the Food Law, as explained in the Board of Directors Report.

 

Non GAAP Adjusted Figures (1)







Second Quarter


2015

2014

Change

Organic Sales Growth
excluding FX and Food Law

Total Group Sales (NIS mm)

1,839

1,949

-5.7%

0.6%

Gross Profit (NIS mm)

689

768

-10.5%


Gross Margins (%)

37.4%

39.4%

 -200 bps


EBITDA (NIS mm)

173

227

-23.5%


EBITDA Margins (%)

9.4%

11.6%

 -220 bps


EBIT (NIS mm)

112

172

-35.3%


EBIT Margins (%)

6.1%

8.9%

 -280 bps


Net Income Attributable to the Company's Shareholders (NIS mm)

31

69

-54.0%


Net Income Margin (Attributable to the Company's Shareholders) (%)

1.7%

3.5%

 -180 bps


EPS (NIS)

0.29

0.64

-54.3%


Operating Cash Flow (NIS mm)

180

113

59.7%


Capex (NIS mm) (2)

(70)

(125)

-44.0%


Net debt (NIS mm)

1,833

1,720

6.6%


Net debt / annual EBITDA

2.0x

1.8x

0.3x







(1)

Based on non-GAAP data, which include the proportionate consolidation of jointly-held partnerships (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period and other income and expenses, unless stated otherwise.



(2)

Investments include the acquisition of fixed assets and investment in intangibles and deferred expenses.



Note: Financial data were rounded off to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands.

 

Non GAAP Adjusted Figures (1)











Second Quarter


Sales (NIS
mm)

Sales
Growth vs.
Last Year

Organic
Sales
Growth
excluding
FX and
Food Law

EBIT (NIS
mm)

NIS Change in EBIT

% Change
in EBIT 

EBIT margins

Change in
EBIT
margins vs.
2014

Sales and EBIT by Operating Segments and Activities









Strauss Israel:









Health & Wellness

474

-5.2%

-3.4%

33

(18)

-34.3%

7.0%

 -310 bps

Fun & Indulgence (2)

204

-4.7%

-1.7%

11

(6)

-33.8%

5.5%

 -250 bps

Total Strauss Israel

678

-5.0%

-2.9%

44

(24)

-34.2%

6.6%

 -290 bps










Strauss Coffee:









Israel Coffee 

137

-9.3%

-6.7%

7

(6)

-39.1%

5.6%

 -280 bps

International Coffee (2)

698

-7.7%

11.1%

43

(33)

-44.5%

6.1%

 -400 bps

Total Strauss Coffee

835

-8.0%

7.6%

50

(39)

-43.8%

6.0%

 -380 bps










International Dips & Spreads:









Sabra (50%) (2)

173

6.9%

-4.3%

14

(9)

-40.6%

7.9%

 -640 bps

Obela (50%) (2)

8

-5.3%

-0.9%

(5)

0

NM

NM

NM

Total International Dips & Spreads

182

6.3%

-4.2%

9

(9)

-50.8%

4.9%

 -560 bps










Other (2)

144

-8.7%

-12.5%

9

12

529.4%

NM

NM

Total Group

1,839

-5.7%

0.6%

112

(60)

-35.3%

6.1%

 -280 bps










(1)

Based on non-GAAP data, which include the proportionate consolidation of jointly-held partnerships (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period and other income and expenses, unless stated otherwise.



(2)

Fun & Indulgence figures include Strauss 50% share in the salty snacks business. International Coffee figures include Strauss 50% share in Tres Coracoes Joint Venture (3C) – Brazil - a company jointly held by the Group (50%) and by the Sao Miguel Group (50%). International D&S figures reflect Strauss 50% share in Sabra and Obela. Other includes Strauss share in Strauss Water China.



Note: Financial data were rounded off to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands.

 

Appendix

 

Reconciliations of GAAP to Non GAAP Adjusted Figures

First Half


2015

2014

GAAP sales

2,516

2,636

Add back JV sales (accounted for under the equity method)

1,253

1,286

Non GAAP sales

3,769

3,922




GAAP EBIT

275

334

Minus: Share of profits of equity-accounted investees

(83)

(104)

Plus: JV EBIT (accounted for under the equity method)

107

126

Additional adjustments:



Non cash equity based compensation 

9

10

Loss (Profit) from accounting mark-to-market of commodity hedging transactions as at the end of period

(5)

(9)

Other expenses

6

19

Non GAAP Adjusted EBIT according to management reports

309

376




Non GAAP financing expenses, net (including JVs)

(64)

(56)

Non GAAP taxes on income (including JVs)

(68)

(106)

Taxes on income in respect of the additional adjustments above

(1)

7

Non GAAP income for the period

176

221

Attributable to the Company's shareholders

133

168

Attributable to Non controlling interests

43

53







Reconciliations of GAAP to Non GAAP Adjusted Figures

Second Quarter


2015

2014

GAAP sales

1,208

1,266

Add back JV sales (accounted for under the equity method)

631

683

Non GAAP sales

1,839

1,949




GAAP EBIT

137

121

Minus: Share of profits of equity-accounted investees

(34)

(48)

Plus: JV EBIT (accounted for under the equity method)

45

57

Additional adjustments:



Non cash equity based compensation 

5

6

Loss from accounting mark-to-market of commodity hedging transactions as at the end of period

(44)

29

Other expenses 

3

7

Non GAAP Adjusted EBIT according to management reports

112

172




Non GAAP financing expenses, net (including JVs)

(46)

(38)

Non GAAP taxes on income (including JVs)

(26)

(41)

Taxes on income in respect of the additional adjustments above

7

3

Non GAAP income for the period

47

96

Attributable to the Company's shareholders

31

69

Attributable to Non controlling interests

16

27




 

 

For further information please contact:


Talia Sessler

Investor Relations Director

Strauss Group Ltd.

972-54-577-2195

972-3-675-2545

talia.sessler@strauss-group.com

Osnat Golan

VP Communications & Digital, Spokesperson

Strauss Group Ltd.

972-52-828-8111

972-3-675-2281


Or


Gil Messing

External Communications Director

Strauss Group Ltd.

972-54-252-5272

 

SOURCE Strauss Group