G. Willi-Food Reports Q2 2015 Financial Results

Aug 18, 2015, 05:26 ET from G. Willi-Food International Ltd.

YAVNE, Israel, Aug. 18, 2015 /PRNewswire/ -- G. Willi-Food International Ltd. (NASDAQ: WILC) (the "Company" or "Willi-Food"), a global company that specializes 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, 2015.

Second Quarter Fiscal 2015 Highlights (income statement highlights compared to same period last year):

  • Sales decreased 10.1% from second quarter of 2014 to NIS 71.2 million (US$ 18.9 million)
  • Gross profit decreased 24.7% from second quarter of 2014 to NIS 15.5 million (US$ 4.1 million), or 21.8% of sales
  • Operating income decreased 42.1% from second quarter of 2014 to NIS 3.2 million (US$ 0.9 million), or 4.5% of sales
  • Net loss of NIS 0.2 million (US$ 0.04 million), or 0.2% of sales
  • Loss per share of NIS 0.01 (US$ 0.003)
  • Cash and securities balance (net of short-term bank debt) of NIS 229.8 million (US$ 61.0 million) as of June 30, 2015

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

Second Quarter Fiscal 2015 Summary Sales for the second quarter of 2015 decreased by 10.1% to NIS 71.2 million (US$ 18.9 million) from NIS 79.2 million (US$ 21.0 million) recorded in the second quarter of 2014. Sales decreased in the second quarter of 2015 primarily due to overall market decline in food product consumption by the Israeli consumer.

Gross profit for the second quarter of 2015 decreased by 24.7% to NIS 15.5 million (US$ 4.1 million) compared to NIS 20.6 million (US$ 5.5 million) recorded in the second quarter of 2014. Second quarter gross margin was 21.8% compared to gross margin of 26.0% for the same period in 2014. The decrease in gross profit and gross margin in the second quarter of 2015 was primarily due to reductions in the prices of certain of our products as a result of continued expectations from our customers for us to reduce prices and to certain expense shifting from selling expenses to gross margin, as a result of government regulations that became effective in January 2015.

Willi-Food's operating income for the second quarter of 2015 decreased by 42.1% to NIS 3.2 million (US$ 0.9 million) compared to NIS 5.6 million (US$ 1.5 million) recorded in the second quarter of 2014. Selling expenses decreased by 14.3% from the comparable quarter of 2014, primarily due to a decrease in promotion expenses mainly due to the shifting of certain related expenses to gross margin as mentioned above, and a decrease in vehicle and transport expenses as a result of adjusting expenses in light of lower sales. Selling expenses as a percentage of sales decreased in the second quarter of 2015 to 12.5% compared to 13.1% in the second quarter of 2014.

General and administrative expenses increased by 19.5% from the second quarter of 2014 mainly due to a NIS 1.7 million (US$ 0.5 million) write-off recorded with respect to the Company's estimated exposure to Mega Retail Ltd. and Eden Briut Teva Market Ltd. debts. See below.

Willi-Food's loss before taxes for the second quarter of 2015 was NIS 0.2 million (US$ 0.04 million) compared to income before taxes of NIS 5.7 million (US$ 1.5 million) recorded in the second quarter of 2014.

Willi-Food's net loss in the second quarter of 2015 was NIS 0.2 million (US$ 0.04 million), or NIS 0.01 (US$ 0.005) per share, compared to NIS 4.4 million (US$ 1.2 million), or NIS 0.34 (US$ 0.09) per share, recorded in the second quarter of 2014.

Willi-Food ended the second quarter of 2015 with NIS 229.8 million (US$ 61.0 million) in cash and securities net of short-term bank debt. Net cash from operating activities for 2015 second quarter was NIS 16.8 million (US$ 4.5 million). Willi-Food's shareholders' equity at the end of June 2015 was NIS 392.5 million (US$ 104.1 million).

First Half Fiscal 2015 Highlights (compared to same period last year)

  • Sales decreased 9.7% to NIS 157.4 million (US$ 41.7 million);
  • Gross profit decreased 22.4% to NIS 32.6 million (US$ 8.6 million), or 20.7% of sales;
  • Operating income decreased 55.9% to NIS 5.3 million (US$ 1.4 million), or 3.4% of sales;
  • Net income decreased 78.5% to NIS 2.5 million (US$ 0.7 million), or 1.6% of sales; and
  • Earning per share of NIS 0.19 (US$ 0.05).

Six-Month Results Willi-Food's sales for the six-month period ending June 30, 2015 decreased by 9.7% to NIS 157.4 million (US$ 41.7 million) compared to sales of NIS 174.2 million (US$ 46.2 million) in the first half of 2014. Gross profit for the period decreased by 22.4% to NIS 32.6 million (US$ 8.6 million) compared to gross profit of NIS 42.0 million (US$ 11.1 million) for the first half of 2014. First half 2015 gross margins were 20.7% compared to gross margins of 24.1% in the same period of 2014.

Operating income for the first half of 2015 decreased by 55.9% to NIS 5.3 million (US$ 1.4 million) from NIS 12.0 million (US$ 3.2 million) reported in the comparable period of last year.  First half 2015 income before taxes decreased by 76.3% to NIS 3.7 million (US$ 1.0 million) compared to NIS 15.5 million (US$ 4.1 million) recorded in the first half of 2014. Net income for the first half of 2015 decreased by 78.5% to NIS 2.5 million (US$ 0.7 million), or NIS 0.19 (US$ 0.05) per share, from NIS 11.5 million (US$ 3.0 million), or NIS 0.88 (US$ 0.23) per share, recorded in the first half of 2014.

Note regarding the Company's exposure to losses due to the arrangement of debts of Mega Retail Ltd. and the stay of proceedings of its subsidiary Eden Briut Teva Market Ltd.:

Further to the Company's announcement on July 1, 2015 - the results for the second quarter of 2015 include a one-time reserve of NIS 1.7 million (US$ 0.5 million) reflecting the Company's estimate of the losses it will experience due to the plan of recovery and arrangement of debts of Mega Retail Ltd. ("Mega"), Israel's second largest supermarket chain, and the stay of proceedings of its subsidiary Eden Briut Teva Market Ltd. ("Eden").

On July 15, 2015, the District Court in Lod, Israel approved the plan of recovery and arrangement of debts submitted by Mega on June 29, 2015, under Section 350 of the Israeli Companies Law - 1999, due among other things to Mega's debt obligations owed to financial debtors, suppliers, service providers and lessors  (the "Arrangement").

Under the Arrangement, 30% of the existing debt to large suppliers, such as Willi-Food, would be deferred for two years until June 30, 2017, with the deferred amounts repayable thereafter in 36 equal monthly installments with 3% annual interest without linkage to the CPI (2% annual interest without linkage to CPI during two-year period of deferral) ("Deferred Debt"). The balance of payments due to suppliers would be paid in four equal weekly installments beginning July 31, 2015 or, if later, the original payment date in the case of large suppliers. In addition, the Arrangement provides that large suppliers would be given the option to convert the Deferred Debt into ordinary shares of Alon Blue Square Israel Ltd., the parent company of Mega, under the conditions stipulated in the Arrangement. The Company's accounts receivable related to Mega, as of June 30, 2015, total approximately NIS 5.6 million (US$ 1.5 million). This sum includes Value Added Tax of approximately NIS 0.9 million (US$ 0.24) which, if not paid, would be returned to the Company by the Israel Tax Authority. As of July 31, 2015, the Company has received payments from Mega in accordance with the Arrangement.

Additionally, on July 15, 2015, the District Court in Lod, Israel approved an extension for a stay of proceedings filed on July 9, 2015 for Mega's subsidiary, Eden ("Stay of Proceedings"). As part of the Stay of Proceedings, the court appointed a trustee for Eden who is charged with, among other things, management of Eden during the Stay of Proceedings, and the negotiation and auction for the sale of Eden's assets. According to reports published by Tiv Taam Holdings 1 Ltd. ("Tiv Taam"), on August 16, 2015, the court approved the sale of Eden's assets for consideration of NIS 29.25 million to Tiv Taam. According to the reports, Tiv Taam has also committed to purchase Eden's non-expired inventory at cost. The Company's accounts receivable related to Eden, as of the date of the Stay of Proceedings, total approximately NIS 0.6 million (US$ 0.16 million). This sum includes Value Added Tax.

In estimating the amount of the reserve and its estimated losses, the Company has assumed that it will be able to recover approximately 70% of the amounts owed to it from Mega and will not be able to recover amounts owed to it from Eden. In addition, it has taken into account the reduction of income taxes that will accrue as a result of the write-off.

Business Outlook Mr. Zwi Williger, Co-Chairman of Willi-Food, commented, "Second quarter sales and profit margins were negatively affected by continued cautious buying patterns demonstrated by our customers, and the increasingly competitive Israel food retail sector. In light of Mega and Eden's recently reported challenges, we expect the Israeli food retail sector to continue its trend towards lower retail prices due primarily to decreased overall consumer spending. Our principal challenge will be in managing expenses in order to offer our products at the low prices our customers expect".

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, 2015, U.S. $1.00 equals NIS 3.769. 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 periods ended June 30, 2015 are presented in accordance with International Financial Reporting Standards ("IFRS").

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.

FORWARD LOOKING STATEMENT 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 and changes in consumer preferences, our inability to protect our intellectual property rights, our inability to successfully integrate our recent acquisitions, 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, 2013, filed with the Securities and Exchange Commission on April 30, 2015. 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.

{FINANCIAL TABLES TO FOLLOW}

 

G. WILLI-FOOD INTERNATIONAL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30,

December

31,

June 30,

December

31,

2 0 1 5

2 0 1 4

2 0 1 4

2 0 1 5

2 0 1 4

2 0 1 4

NIS

US dollars (*)

(in thousands)

ASSETS

Current assets

Cash and cash equivalents

86,178

58,559

82,902

22,864

15,537

21,996

Financial assets carried at fair value through profit or loss

124,416

158,654

122,733

33,010

42,094

32,564

Short term deposit

19,235

-

19,445

5,103

-

5,159

Trade receivables

87,682

96,099

86,690

23,265

25,497

23,001

Other receivables and prepaid expenses

2,485

6,329

3,700

659

1,679

982

Inventories

46,932

38,875

48,586

12,452

10,314

12,891

Current tax assets

2,463

-

1,372

653

-

364

Total current assets

369,391

358,516

365,428

98,006

95,121

96,957

Non-current assets

Property, plant and equipment

74,798

69,143

73,826

19,845

18,345

19,587

Less -Accumulated depreciation

30,235

26,726

28,579

8,022

7,091

7,583

44,563

42,417

45,247

11,823

11,254

12,004

Other receivables and prepaid expenses

146

51

133

39

13

35

Goodwill

36

36

36

10

10

10

Deferred taxes

1,725

133

505

459

34

135

Total non-current assets

46,470

42,637

45,921

12,331

11,311

12,184

415,861

401,153

411,349

110,337

106,432

109,141

EQUITY AND LIABILITIES

Current liabilities

Short-term bank debt

4

-

-

1

-

-

Trade payables

17,072

14,888

15,518

4,530

3,950

4,117

Employees Benefits

2,265

2,135

2,120

601

566

564

Current tax liabilities

-

9

-

-

2

-

Other payables and accrued expenses

3,432

5,992

7,010

911

1,590

1,860

Total current liabilities

22,773

23,024

24,648

6,043

6,108

6,541

Non-current liabilities

retirement benefit obligation

594

614

635

157

163

168

Total non-current liabilities

594

614

635

157

163

168

Shareholders' equity

Share capital NIS 0.1 par value (authorized - 50,000,000 shares, issued and outstanding – 13,107,579 shares at June 30, 2015; 12,974,245 shares at December 31, 2014)

1,420

1,407

1,407

377

373

373

Additional paid in capital

125,378

120,228

121,430

33,265

31,899

32,218

Capital fund

247

247

247

65

65

66

Remeasurement of the net liability in respect of defined benefit

(57)

(33)

(57)

(15)

(9)

(15)

Retained earnings

265,506

255,666

263,039

70,445

67,833

69,790

Equity attributable to owners of the Company

392,494

377,515

386,066

104,137

100,161

102,432

415,861

401,153

411,349

110,337

106,432

109,141

(*) 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,

ended June 30,

2 0 1 5

2 0 1 4

2 0 1 5

2 0 1 4

2 0 1 5

2 0 1 4

NIS

U.S. dollars (*)

In thousands (except per share and share data)

Sales

157,350

174,178

71,174

79,209

41,748

46,213

Cost of sales

124,792

132,209

55,679

58,644

33,110

35,078

Gross profit

32,558

41,969

15,495

20,565

8,638

11,135

Selling expenses

19,227

20,420

8,867

10,353

5,101

5,418

General and administrative expenses

10,211

9,684

5,532

4,628

2,709

2,569

 Other income

(2,179)

(147)

(2,135)

-

(578)

(39)

Total operating expenses

27,259

29,957

12,264

14,981

7,232

7,948

Operating income

5,299

12,012

3,231

5,584

1,406

3,187

Financial income

1,228

4,156

(632)

659

325

1,103

Financial expense

2,864

684

2,761

522

760

181

Total financial (lost) income

(1,636)

3,472

(3,393)

137

(435)

922

 Income (lost) before taxes on income

3,663

15,484

(162)

5,721

971

4,109

 

 Taxes on income

1,196

4,003

(10)

1,347

317

1,062

Profit (lost) for the period

2,467

11,481

(152)

4,374

654

3,047

Earnings per share:

Earnings per share

Basic earnings per share

0.19

0.88

(0.01)

0.34

0.05

0.23

Diluted earnings per share

0.19

0.88

(0.01)

0.34

0.05

0.23

Shares used in

computation of basic EPS

13,014,245

12,974,245

13,974,245

12,974,245

13,014,245

12,974,245

(*) 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,

ended June 30,

2 0 1 5

2 0 1 4

2 0 1 5

2 0 1 4

2 0 1 5

2 0 1 4

NIS

U.S. dollars (*)

In thousands (except per share and share data)

Cash flows - operating activities

Profit from operations

2,467

11,481

(152)

4,374

654

3,045

Adjustments to reconcile net income to net cash from operating activities (Appendix)

456

(8,199)

16,998

16,503

121

(2,175)

Net cash from operating activities

2,923

3,282

16,846

20,877

775

870

Cash flows - investing activities

Acquisition of property plant and equipment

(2,232)

(4,004)

(712)

(2,175)

(592)

(1,062)

Proceeds from sale of property plant and Equipment

560

970

428

225

148

257

Proceeds from Loan carried at fair value through profit or loss

-

65,400

-

-

-

17,353

Proceeds from purchase of marketable securities, net

(1,435)

(43,268)

(6,905)

(11,104)

(381)

(11,480)

Net cash from (used in) investing activities

(3,107)

19,098

(7,189)

(13,054)

(825)

5,068

Cash flows - financing activities

Exercise of options into shares

3,456

-

-

-

917

-

Short-term bank debt

4

(18)

(22)

(2,644)

1

(5)

Net cash from (used in)  financing activities

3,460

(18)

(22)

(2,644)

918

(5)

Increase in cash and cash equivalents

3,276

22,362

9,635

5,179

868

5,933

Cash and cash equivalents at the beginning of the financial year

82,902

36,197

76,543

53,380

21,996

9,604

Cash and cash equivalents of the end of the financial year

86,178

58,559

86,178

58,559

22,864

15,537

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

 

G. WILLI-FOOD INTERNATIONAL LTD.

APPENDIX TO CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six months

Three months

Six months

ended June 30,

ended June 30,

Ended June 30,

2 0 1 5

2 0 1 4

2 0 1 5

2 0 1 4

2 0 1 5

2 0 1 4

NIS

U.S. dollars (*)

In thousands (except per share and share data)

Cash flows from operating activities:

A.  Adjustments to reconcile net profit to net cash from operating activities

Decrease in deferred income taxes

(1,220)

(632)

(1,512)

(432)

(324)

(168)

Unrealized gain from Short term deposit

210

-

889

-

56

-

Unrealized loss (gain) on marketable securities

(248)

(2,522)

1,838

486

(66)

(669)

Depreciation and amortization

1,980

1,779

1,003

889

525

472

Capital gain on disposal of  property plant and equipment

(220)

(188)

(176)

-

(58)

(50)

Stock based compensation reserve

505

947

220

471

134

251

Unrealized Gain of loan carried at fair value through profit or loss

-

(100)

-

-

-

(26)

Net foreign exchange gain

-

(786)

-

(786)

-

(208)

Changes in assets and liabilities:

Decrease (increase) in trade receivables and other receivables

(881)

(16,803)

11,832

6,810

(234)

(4,458)

Decrease (increase) in inventories

1,654

15,126

4,701

14,625

439

4,013

Increase (decrease) in trade and other payables, and other current liabilities

(1,324)

(5,020)

(1,797)

(5,560)

(351)

(1,331)

456

(8,199)

16,998

16,503

121

(2,175)

B.  Significant non-cash transactions:

Purchase of property, plant and equipment

(596)

4,667

15

2,220

(158)

1,238

Supplemental cash flow information:

Income tax paid

4,584

4,667

2,394

2,220

1,216

1,238

(*) 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. Gil Hochboim, CEO and CFO (+972) 8-932-1000 gil@willi-food.co.il

 

SOURCE G. Willi-Food International Ltd.



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http://www.willi-food.com