Salmonella in chocolate: the immediate damage to Strauss, about NIS 170-230 million
Strauss announced today to the investing public that the salmonella affair in chocolate, which led to the collection of its products from the shelves and the temporary closure of the plant in the Galilee landscape, will cost about NIS 200 million.
The immediate damage is estimated at close to NIS 120 million, and the rest - as a result of ongoing damage.
However, it may be the tip of the iceberg
Thursday, 12 May 2022, 12:47 Updated: 13:10
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Under the headline: "Preliminary estimates regarding financial consequences in connection with the recall event and plant shutdown and in connection with the first quarter results for 2022," Strauss reported to the stock exchange today on the financial consequences of the salmonella affair in chocolate, which led to recall - The closure of the plant in the Galilee landscape by the Ministry of Health and, of course, the loss of market share of products that were considered leaders in the various categories at
Strauss estimate (and clarify that the assessment is according to current estimates) that most damage will be revealed in the first quarter reports. In the company's net profit of NIS 115-125 million.
The Company's assessment is based on estimates that include a decrease in sales in respect of credits to the Company's customers, the costs of collecting products from the chains and stores, an estimate of the extent of total destruction, compensation costs as determined by the Company to consumers, additional ancillary costs and considering the tax effect.
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It's not so pleasant to see a factory closed - and now it's also becoming clear how expensive it can be.
Strauss-Elite plant in the Galilee landscape (Photo: Yoav Itiel)
Expected impact on the annual report
In addition to this estimate, Strauss also publishes an assessment of the effects on the financial results of 2022 as a whole.
The company estimates, according to preliminary estimates, that due to the recall and shutdown of the plant in 2022, significant damage to the company's net profit for 2022 of NIS 170-230 million is expected
. In accordance with the forecasts regarding the end date of the plant shutdown and return to production and sales based on various possible scenarios, additional ancillary costs and taking into account the company's assessment regarding the existence of insurance coverage for some of the damages caused to the company.
It should be noted that as of the date of this report the company can not assess the future impact on the company's market shares in the confectionery products, and this is conditional on the end of the plant shutdown and return to full operation and indirect effects of the recall event on the company's results.
It will also be emphasized that as of the date of this report, the Company is unable to assess the implications for legal proceedings in connection with the recall and shutdown event of the plant including legal proceedings already filed.
The president of the Strauss Group, Giora Bar-De'a, the chairman of Ofra Strauss and the CEO of Strauss Israel, Eyal Dror, at the press conference at which they first responded to the events.
Now it's the turn of the account (Photo: Flash 90, Avshalom Shashoni)
The losses may be much greater
Strauss clarifies that the estimates provided to the public today are based on the information available to the Company at the time of this report and may not materialize or materialize in any material way.
Among the reasons that may affect the assessment reported by the company to the stock exchange, Strauss enumerated, among other things:
continued receipt of results for tests conducted by the company, further developments of the events, additional requirements of the Ministry of Health, changes in plant return costs to full production capacity. The company in connection with the end date of the plant shutdown, the duration and rate of return to full production on all lines, results of legal proceedings against the company that have already been filed or those that will be filed (as they will be filed in the future), rate and scope of the company's ability to outsource. To the extent that they are utilized), the extent of the demand for the products after their return to the market, an error or non-realization of estimates and the extent of the damages that will be compensated under the insurance coverage.