Strauss Group Publishes its 2010 Third Quarter and Nine Months Results Reporting Sales Growth and Improved Profits
TEL AVIV, Israel, November 17, 2010 /PRNewswire-FirstCall/ --
- Strauss Group Sales in the Third Quarter Increased 9.2%, With 5.9% Growth in Gross Profits and 0.9% Growth in Operating Profit
The Strauss Group (STRS.TA) today reported its results for the third quarter and the first nine months of 2010.
Ofra Strauss, Chairperson of Strauss Group, said today, "Strauss Group continues to grow with further investment in the development of future growth drivers of the Group, expansion of the infrastructure and establishing the status of Sabra as a market leader in the fresh dips and spreads category in North America and entering China using Strauss Water as part of our vision to become a global water company.
Gadi Lesin, President & CEO of Strauss Group, said today:"Strauss Group continues its growth and international expansion, presenting a strong third quarter with 9.2% growth in Group sales, 5.9% improvement in gross profit and 0.9% improvement in operating profit. Summing up the first nine months of the year, I am pleased to report that the Group sales were up 8.4%, with 12.5% increase in gross profit and 5.1% increase in net profit attributed to our shareholders.
"After the end of the Third quarter we achieved another milestone in our global expansion, signing a Partnership Agreement between Strauss Water and Haier Group, the Chinese home appliances giant, to establish a joint venture in drinking water solutions in China. We also completed, via our subsidiary Sabra, the acquisition of the salsa company California Creative Foods (CFF), another step towards expanding our refrigerated salads business in North America.
Third Quarter Financial Highlights[1]:
- Sales totaled NIS 1.77 billion (NIS 1.62 billion last year),
up 9.2%. Organic growth net of exchange rates effect was up 3.5%.
- Gross profit was up 5.9%, totaling NIS 642 million (36.3% of
sales) compared to NIS 607 million last year (37.4% of sales)
- Operating profit was up 0.9%, totaling NIS 161 million (9.1%
of sales) compared to NIS 159 million last year (9.8% of sales)
- Net profit attributed to shareholders totaled NIS 54 million
compared to NIS 64 million last year, down 17.4%.
NINE MONTHS Financial Highlights[2]:
- Sales totaled NIS 5.0 billion (NIS 4.7 billion last year),
up8.4 %, with quantitative growth in most company activities. Organic
growth net of exchange rates effect totaled 2.1%.
- Gross profit was up 12.5%, totaling NIS 1.9 billion (38.5%
of sales) compared to NIS 1.7 billion last year (37.0% of sales).
- Operating profit was up 11.5%, totaling NIS 479 million
(9.5% of sales) compared to NIS 429 million last year (9.2% of sales).
- Net profit attributed to shareholders totaled NIS 209
million, compared to NIS 198 million last year, a 5.1% increase
1,2 Nine months and third quarter figures are pro-forma neutralizing the
employees options and one time bonus, hedging transactions, non
recurring other income and expenses
Main pro-forma data (in NIS million):
Nine Months Third Quarter
2010 2009 % Chg 2010 2009 % Chg
Sales 5,047 4,658 8.4% 1,771 1,622 9.2%
Gross Profit 1,941 1,726 12.5% 642 607 5.9%
Operating Profit (1) 479 429 11.5% 161 159 0.9%
Profit for the Period 286 265 7.1% 81 90 12.4%-
Net Profit (2) 209 198 5.1% 54 64 17.4%-
(1) Before other income (expenses)
(2) Attributed to the shareholders of the Company
Home base
Strauss Group is the second-largest company in the Israeli food industry and in the first nine months of 2010 held an 11.2% share of the food and beverage market in the domestic retail market (on a monthly average in financial terms, according to StoreNext figures. The Israeli market is the Group's home market, in which it is active in various categories.
The sales for the entire business of Strauss Group in Israel include the Health & Wellness and Fun & Indulgence Divisions, the coffee business in Israel, Max Brenner in Israel and the Tami4 activity.
In the first nine months of 2010 Strauss Group's sales in Israel totaled NIS 2,770 million compared to NIS 2,493 million in 2009, an increase of 11.1%.
In the third quarter of 2010 the Group's sales in Israel totaled NIS 953 million compared to NIS 847 million in the corresponding period in 2009, an increase of 12.6%.
Further to the acquisition of Tami4 in the fourth quarter of 2009, the Group has intensified its touch points with the Israeli consumer and expanded beyond retail and away-from-home (AFH) sales into a direct interface with the consumer.
The Coffee Sector
In the global coffee business the Group focuses on the development, manufacture, marketing and sale of branded coffee products in Israel and in various emerging markets such as Central and Eastern Europe and Brazil.
Sales
Sales by Strauss's Coffee Sector in the first nine months of 2010 totaled NIS 2,465 million compared to NIS 2,440 million last year, an increase of 1.0%. After neutralizing the impact of currency exchange rates, sales decreased by 0.3%. Organic sales (after neutralizing the acquisition of businesses and the impact of exchange rate differentials) decreased by 1.3%.
Sales by the sector in the third quarter totaled NIS 868 million compared to NIS 859 million last year, an increase of 1.1%. After neutralizing the impact of currency exchange rates, sales increased by 2.1%. Organic sales (after neutralizing the acquisition of businesses and the impact of exchange rate differentials) increased by 1.4%.
Sales in the nine months and in the quarter were positively influenced by the continued growth in Brazil and in Russia, but were negatively influenced by the weakness in the various markets in CEE and increasing competition.
Gross profit in the first nine months increased by 5.8% and totaled NIS 813 million (33.0% of sales) compared to NIS 768 million (31.5%) last year. The increase in gross profit was mainly the result of the decrease in part of the raw material prices (mainly in the first half of 2010) compared to last year and of the currency impact in the various countries.
In the third quarter gross profit decreased by 5.3% and totaled NIS 261 million (30.1%) compared to NIS 275 million (32.1%) last year. The decrease in gross profit was mainly due to the increase in coast of sales and the currency impact.
The operating profit of the Coffee Sector in the first nine months increased by 6.9% and totaled NIS 205 million (8.3% of sales) compared to NIS 192 million (7.9% of sales) last year. The operating profit was positively influenced mainly by the growth in gross profit in relation to last year.
In the third quarter the operating profit of the Coffee Sector totaled NIS 64 million (7.4% of sales) compared to NIS 69 million (8.0%) last year. The decrease in operating profit was mainly due to the decrease in gross profit in relation to last year.
The Israel Sector - Strauss Israel
Sales
In the first nine months of 2010 sales by the Israel Sector totaled NIS 2,012 million compared to NIS 1,990 million last year, an increase of 1.1%. Sales by the sector in the third quarter totaled NIS 688 million compared to NIS 682 million last year, an increase of 1.0%. The sales growth was positively influenced by the volume increase in most units and the continuing investment in innovation. The growth in sales is evident in all units, notably Fun & Indulgence.
Gross profit in the Israel Sector totaled NIS 838 million in the first nine months compared to NIS 829 million last year, an increase of 1.0%. The gross profit rate decreased from 41.7% to 41.6% this year. In the third quarter gross profit totaled NIS 278 million compared to NIS 287 million last year, a decrease of 3.1%. The gross profit rate decreased from 42.1% to 40.4%.
The gross profit in the first nine months and third quarter was positively influenced by the volume growth in sales and by the continued implementation of streamlining processes in the cost of sales. This was partially offset by the change in the product mix and the increase in raw material prices.
Management accounting operating profit in Israel in the first nine months of 2010 increased by 3.3% and amounted to NIS 243 million. The operating profit margin improved and amounted to 12.1% compared to 11.8% in the corresponding period last year. The growth in the operating profit in the period was the result of the improvement in gross profit and the continuing streamlining processes.
In the third quarter the operating profit totaled NIS 87 million compared to NIS 86 million last year, an increase of 0.4%. The operating profit margin was maintained at 12.6%.
The Sabra Refrigerated Dips Business in the USA
Sabra's activity has been proportionately consolidated (50%) since the closing of the transaction with PepsiCo, beginning in the second quarter of 2008.
In the first nine months of 2010 Sabra's sales continued to grow, as did its market shares, and it maintained a leading position in the refrigerated flavored spreads category.
Sabra's average market share in the first nine months of this year was 46.0% compared to an average market share of 38.7% in the corresponding period last year and an average market share of 41.2% in the fourth quarter of 2009 (according to IRI data published in October 2010).
Sales (100%) - In the first nine months of 2010 Sabra's sales totaled NIS 428 million compared to NIS 310 million last year, an increase of 38.4%. After neutralizing the currency impact, growth amounted to 45.8%.
In the third quarter of the year Sabra's sales totaled NIS 159 million compared to NIS 108 million last year, an increase of 47.4%. After neutralizing the currency impact, growth amounted to 48.7%.
The operating profit in the first nine months of 2010 totaled NIS 47 million (10.9% of sales) compared to NIS 52 million last year (16.8%), a decrease of 10.2%.
In the third quarter operating profit totaled NIS 14 million (8.8% of sales) compared to NIS 20 million last year (18.7%), a decrease of 30.8%. The decrease in operating profit in the quarter and in the nine months is the result of the opening of the new plant in Virginia and the continued operation of the old plant in New York.
MAX BRENNER
In the first nine months of 2010 Max Brenner's sales totaled NIS 78 million compared to NIS 74 million last year, an increase of 5.4%. After neutralizing the impact of currency exchange rates, growth amounted to 7.9%.
In the third quarter of 2010 Max Brenner's sales totaled NIS 29 million compared to NIS 28 million last year, an increase of 4.4%. After neutralizing the impact of currency exchange rates, growth in the third quarter amounted to 5.1%.
During the quarter the Company opened a new Chocolate Bar in Las Vegas. There are presently 31 Max Brenner Chocolate Bars in operation around the world: 6 in Israel, 3 in the USA, 2 in the Philippines, 1 in Singapore and 19 in Australia. Other than 7 branches that are owned by the Company, all other branches are operated under franchise.
At the beginning of next year the Company is scheduled to open another Max Brenner Chocolate Bar in Boston, while continuing to invest in the development of core infrastructure for the Max Brenner business.
STRAUSS WATER
Strauss Water's pro-forma sales (assuming that the Tami4 business had been fully consolidated from the beginning of 2009) amounted to NIS 279 million in the first nine months of 2010 compared to NIS 238 million last year, an increase of 17.1%. In the third quarter Strauss Water sales totaled NIS 107 million compared to NIS 93 million in the corresponding period last year, an increase of 15.5%.
In the next few years the Company plans to continue to invest in the development of infrastructure for the global expansion of the water business.
After the end of the third quarter the Group announced that a partnership agreement had been signed between Strauss Water and the Haier Group, the Chinese consumer electronic appliances giant, for the establishment of a joint venture in home water solutions in China. The venture is jointly owned by Strauss Water (50%) and Haeir Consumer Goods (50%) and will be established with an initial investment of $20 million (each of the parties is to invest $10 million). The joint venture will purchase the products from Strauss Water and will receive distribution, sales and servicing services from subsidiaries of the Haier Group. The closing of the transaction is conditional on the receipt of the necessary approvals and the completion of accompanying agreements, which are expected to be received and signed by year end.
Financial Results:
Sales
In the first nine months of 2010 the Group's sales amounted to NIS 5,047 million compared to NIS 4,658 million last year, an increase of 8.4%. After neutralizing the currency impact, growth amounted to 7.8%. Organic growth after neutralizing the impact of changes in exchange rates in the first nine months amounted to 2.1%.
In the third quarter of 2010 the Group's sales amounted to NIS 1,771 million compared to NIS 1,622 million last year, an increase of 9.2%. After neutralizing the currency impact growth amounted to 9.8%, and organic sales after neutralizing the impact of changes in exchange rates in the second quarter increased by 3.5%.
Gross Profit
In the first nine months of the year the financial accounting gross profit totaled NIS 1,942 million (38.5%) compared to NIS 1,732 million last year (37.2%), an increase of 12.1%. The management accounting gross profit in the first nine months totaled NIS 1,941 million compared to NIS 1,726 million last year, an increase of 12.5%, and rose from 37.0% to 38.5% of sales. The gross profit in the first nine months improved in most of the activities of the Group, particularly Sabra and coffee. The gross profit was positively influenced by the volume growth in some of the Company's businesses and from the consolidation of the Tami4 activity for the first time.
In the third quarter the financial accounting gross profit totaled NIS 633 million (35.7%) compared to NIS 611 million last year (37.6%), an increase of 3.6%. The management accounting gross profit in the third quarter amounted to NIS 642 million compared to NIS 607 million last year, an increase of 5.9%, and rose from 37.4% to 36.3% of sales.
The gross profit in the third quarter improved in part of the Group's businesses, notably Sabra. The gross profit was positively influenced by the growth in sales volumes in some activities, as well as by the consolidation of the Tami4 activity for the first time.
The Group has contended with the changes in raw material prices and exchange rates through operational streamlining in most areas of its activity and by raising the prices of its products in the coffee business outside of Israel.
Operating Profit before Other Income (Expenses)
First nine months:
The financial accounting operating profit (before other expenses) totaled NIS 471 million (9.3% of sales) compared to NIS 425 million (9.1%), an increase of 10.7%. The management accounting (pro-forma) operating profit totaled NIS 479 million (9.5% of sales) compared to NIS 429 million (9.2%) last year, an increase of 11.5%.
The growth in the Group's operating profit is mainly due to the increase in the gross profit.
Third quarter:
The financial accounting operating profit (before other expenses) totaled NIS 149 million (8.4% of sales) compared to NIS 159 million (9.8%) last year, a decrease of 6.6%. The decrease in the Group's operating profit is mainly due to the increase in selling and marketing expenses.
The management accounting operating profit in the quarter totaled NIS 161 million (9.1% of sales) compared to NIS 159 million (9.8%) last year, an increase of 0.9%.
Other Income (Expenses), Net
Other expenses, net, totaled NIS 32 million in the first nine months of 2010, compared to other expenses, net, amounting to NIS 27 million in the corresponding period last year. Most of the expenses in the first nine months are attributed to the discontinuation of the activity of the subsidiary in Bulgaria further to Strauss Coffee's decision to leave this market. Following this decision the subsidiary recognized expenses of NIS 15 million. Most of the other expenses in the first nine months of 2010 are attributed to the impairment of goodwill in Strauss Coffee's subsidiary in Serbia in an amount of NIS 22 million in the third quarter.
In the third quarter, other expenses, net, totaled NIS 5 million compared to negligible expenses in the corresponding period last year.
Income for the Period
In the first nine months of 2010 the financial accounting income for the period amounted to NIS 250 million compared to NIS 237 million last year, an increase of 5.2%. The pro-forma income for the period amounted to NIS 286 million compared to NIS 265 million last year, an increase of 7.1%. The profit was positively impacted by the growth in the operating profit and conversely, by the increase in financing and tax expenses.
In the third quarter the financial accounting income for the period amounted to NIS 66 million compared to NIS 90 million last year, a decrease of 27.5%. The management accounting income for the period amounted to NIS 81 million compared to NIS 90 million last year, a decrease of 12.4%. The decrease in profit is mainly the result of the increase in tax expenses compared to last year.
Income for the Period for the Shareholders of the Company
In the first nine months the financial accounting income for the period for the shareholders of the Company totaled NIS 178 million compared to NIS 174 million last year, an increase of 2.1%. The increase in profit is due mainly to the increase in the operating profit. The management accounting income for the shareholders of the Company totaled NIS 209 million compared to NIS 198 million last year, an increase of 5.1%.
In the third quarter the financial accounting income for the period for the shareholders of the Company totaled NIS 42 million compared to NIS 62 million last year, a decrease of 33.1%. The decrease in income is mainly due to the decrease in the operating profit and the increase in tax expenses.
The management accounting income for the shareholders of the Company in the third quarter totaled NIS 54 million compared to NIS 64 million last year, a decrease of 17.4%.
Income for the Period for Non-controlling interest Holders
In the first nine months of 2010 the non-controlling interest share in the income of subsidiaries totaled NIS 72 million compared to NIS 63 million in the corresponding period last year, an increase of 13.9%. The increase in the non-controlling interest share is mainly due to the continued growth in the profits of the Coffee Sector.
In the third quarter the non-controlling interest share in the income of subsidiaries totaled NIS 24 million compared to NIS 28 million in the corresponding period last year, a decrease of 15.3%.
Table 1
Following are the condensed financial accounting statements of income for
the quarter and the nine months ended September 30, 2010 and 2009 (in NIS
millions):
Nine Months Third Quarter
2010 2009 % Chg 2010 2009 % Chg
Sales 5,047 4,658 8.4 1,771 1,622 9.2
Cost of sales not including impact
of hedging transactions
3,106 2,932 5.9 1,129 1,015 11.1
Revaluation of the balance of
hedging transactions on commodities
as at the end of the period (1) (6) 9 (4)
Cost of sales 3,105 2,926 6.1 1,138 1,011 12.5
Gross Income 1, 942 1,732 12.1 633 611 3.6
Selling and marketing expenses 1,177 1,049 12.2 391 371 5.3
General and administrative expenses 294 258 14.1 93 81 16.3
Operating income before other 471 425 10.7 149 159 -6.6
expenses
Other expenses, net (32) (27) (5) -
Operating Income 439 398 10.3 144 159 -9.7
Financing expenses, net (72) (70) 2.3 (43) (43) -1.8
Income before taxes on income 367 328 12.0 101 116 -12.7
Taxes on income (117) (91)29.6 (35) (26) 40.3
Effective tax rate 32.0% 27.7% 35.1% 21.8%
Income for the period 250 237 5.2 66 90 -27.5
Income attributed to the
shareholders of the Company
178 174 2.1 42 62 -33.1
Income attributed to the minority 72 63 13.9 24 28 -15.3
interest
Table 2
Following are the condensed results of business operations
(based on the Company's pro-forma statements) for the quarter and the
nine months ended September 30, 2010 and 2009 (in NIS millions):
Nine Months Third Quarter
2010 2009 % Chg 2010 2009 % Chg
Sales 5,047 4,658 8.4 1,771 1,622 9.2
Cost of sales 3,106 2,932 5.9 1,129 1,015 11.1
Gross Income 1,941 1,726 12.5 642 607 5.9
Selling and marketing expenses 1,177 1,049 12.1 391 371 5.3
General and administrative expenses 285 248 15.5 90 77 19.5
Operating income - management 479 429 11.5 161 159 0.9
accounting
Financing expenses, net (72) (70) 2.3 (43) (43) -1.8
Income before taxes on income 407 359 13.3 118 116 1.8
Taxes on income (121) (94)30.7 (37) (26) 55.2
Income for the period - management 286 265 7.1 81 90 -12.4
accounting
Income attributed to the
shareholders of the Company
209 198 5.1 54 64 -17.4
Income attributed to the minority 77 67 12.9 27 26 2.2
interest
Table 3
Following are the condensed results of business operations
(based on the Company's pro-forma statements) of the business sectors
for the quarter and the first nine months ended September 30, 2010 and
2009 (in NIS millions):
Nine Months Third Quarter
2010 2009 % Chg 2010 2009 % Chg
Israel
Net sales 2,012 1,990 1.1 688 682 0.9
Gross income 838 829 1.0 278 287 -3.1
Operating income 243 235 3.3 87 86 0.4
Coffee
Net sales 2,465 2,440 1.0 868 859 1.1
Gross income 813 768 5.8 261 275 -5.3
Operating income 205 192 6.9 64 69 -6.3
Other *
Net sales 570 228 149.3 215 81 162.8
Gross income 290 129 125.2 103 45 133.4
Operating income 31 2 - 10 4 149.9
Total
Net sales 5,047 4,658 8.4 1,771 1,622 9.2
Gross income 1,941 1,726 12.5 642 607 5.9
Operating income 479 429 11.5 161 159 0.9
Table 4
Consolidated Balance Sheet (in NIS million):
September 30 September 30
2010 2009
(Unaudited) (Unaudited)
Cash and cash equivalents 803 1,141
Marketable securities and deposits 123 66
Trade receivables 1,057 1,036
Income tax receivables 87 41
Other receivables and debit balances 201 224
Inventory 717 655
Other investments and long-term debit
balances 140 144
Assets designated for the payment of
employee benefits, net 7 7
Fixed assets 1,451 1,316
Intangible assets 1,541 1,303
Deferred expenses 28 31
Investment property 5 23
Deferred tax assets 7 6
Total assets 6,167 5,993
Current maturities of debentures 261 95
Short terms loans and credit 274 177
Trade payables 642 629
Income tax payables 46 65
Other payables and credit balances 549 433
Provisions 37 23
Debentures 1,265 1,499
Long-term loans and credit 179 54
Long-term payables and credit balances 31 49
Employee benefits, net 30 32
Deferred taxes 138 98
Group equity 2,715 2,839
Total liabilities and equity 6,167 5,993
---------------------------------
For additional information:
Investors Contact
Yaffa Cohen-Ifrah
Director of Investor Relations
Strauss Group Ltd.
Tel: +972-3-6752545
Mob: +972-54-5772195
Email: [email protected]
http://www.strauss-group.com
Media Contact
Osnat Golan
Corporate Communications Director
Strauss Group Ltd.
Tel: +972-3-6752281
Mob: +972-52-8288111
Email: [email protected]
http://www.strauss-group.com
SOURCE Strauss Group Ltd
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