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The giant importer closes a complex year. What does the cost of living have to do with it? - Walla! Of money


Diplomat closes the year: an increase in revenues to NIS 756 million and a decrease in net profit to NIS 5 million due to the increase in operating and financing expenses

Milka: A major breach due to the salmonella crisis at the competitor (Photo: PR)

One of the largest importers in Israel, Diplomat, summarizes the year 2022 with data from which you can learn not only about the company's situation, but also about the cost of living in Israel.

Diplomat imports to Israel several leading brands, in the city in the field of food and care, among them: Gillette, Heinz, Wella, Pampers, Mazola, Pringles, Kikuman, Oreo, Jacobs, Starkist (the canned tuna that was the focus of the consumer protest), Tampax, Milka ( which flourished thanks to the salmonella crisis at the competitor, Strauss-Elite), Red Bull and more.

First, you can see

an increase in the company's revenues

, which may indicate that we paid more, since some of the brands that Diplomat imports and distributes in Israel have become more expensive.

Second, you can see

a contraction in profits

- While the gross profit increased, the operating profit and the net profit decreased, both in numbers and as a percentage of the turnover (the gross profit in percentage remained as it was).

According to the company, these are, among other things, operating costs, an increase in salary expenses and financing costs (it can be assumed that due to the interest rate increases that took place gradually throughout the year 2022 - and are still ongoing), and more.

In other words:

the report contains data that can be interpreted as justification for the price increases that took place throughout

last year (and will probably continue this year, especially if the shekel weakens against the various currencies, especially the dollar and the euro.

Nevertheless, it is not certain that the Israeli who is struggling with the cost of living should feel sorry for the importer, even if It is evident in the numbers that she had something to base her demand to raise prices on: a net profit of approximately NIS 76 million, showing that even in periods of increased operating expenses at the same time as a (slight, as of the end of 2022) decrease in private consumption, it still pays to be a major importer in Israel.

Noam Weiman, CEO of Diplomat (Photo: Keren Ben Zion)

The main points of the report

Revenues in 2022 amounted to approximately NIS 2.91 billion, compared to approximately NIS 2.74 billion

in 2021. The company presented growth both in its operations in Israel and in its operations abroad.

NIS 1.64 billion in 2021. About half of the increase in activity in Israel is attributed to organic growth, the other half is attributed to the consolidation of Meditrend for the first time, starting in the second quarter of 2022. Meditrend specializes in the import and marketing of non-prescription pharmaceutical products, functional food, food supplements and paramedical products

. Abroad - South Africa, Georgia, New Zealand and Cyprus - increased and amounted to approximately NIS 1.15 billion, compared to approximately NIS 1.09 billion in 2021, thanks to organic growth and the launch of new brands.

Neutralizing the effect of negative translation differences, the company would have shown a higher growth of approximately 7% in revenues from overseas operations.

The gross profit

In 2022 it amounted to about NIS 615 million, compared to about NIS 574 million in 2021. The gross profitability rate in 2022 amounted to about 21% - the same as the profitability rate in 2021.

The operating profit

in 2022 amounted to approximately NIS 113 million, compared to approximately NIS 128 million in 2021. The decrease in operating profit, despite the growth in revenues, was mainly due to an increase in the rate of operating expenses and with an emphasis on: an increase in expenses directly attributed to the increase in the volume of inventory, an increase in salary expenses, consolidation for the first time of the Meditrend company and the increase in the price of additional inputs.

The operating profit rate in 2022 decreased to approximately 3.9% of revenues, compared to approximately 4.7% of revenues in 2021.

The net profit

In 2022 it amounted to about NIS 76 million, compared to a net profit of about NIS 90 million in 2021. The decrease in net profit was due, as mentioned, to the increase in operating expenses, alongside an increase in financing expenses, net of about NIS 6 million, mainly due to the revaluation of the contingent consideration and the option the future for the purchase of the remaining shares of the Meditrend subsidiary.

Diplomat's equity increased to approximately NIS 769 million and constitutes approximately 50.6% of the total balance sheet.

Noteworthy developments after the end of the balance sheet period

: In March 2023, all the conditions precedent were met, including the approval of the Commissioner of Competition, for the purpose of completing the transaction for the purchase of 51% participation units in the Dorot Garlic Products and Seasoning Cooperative Agricultural Association, in exchange for a total of approximately NIS 76 million, subject to for price adjustments as agreed between the parties.

Dorot operates in the field of development, production, marketing and sale of frozen vegetable and seasoning products under the "Dorot" brand in Israel and is considered one of the leading players in its field in the local market.

In addition, "Dorot" also operates in the USA and several European countries, which make up about half of the group's total sales. These days, the company is working to complete the transaction after, as mentioned, all the conditions have been met. In January 2023, Diplomat completed

the purchase of Neve Pharma and Bigdam. Both companies operate in the pharmaceutical fields and the nutritional supplements. As part of the agreements, Diplomat purchased 65% of the shares of Neve Pharm for approximately NIS 81 million, as well as 90.2% of the shares of Bigdam for approximately NIS 15 million. Neve Pharma is engaged in the development and marketing of nutritional supplements,

medical accessories, as well as the development and production of brands private for pharmaceutical companies in several countries around the world Bigdam is engaged in sales of Neve Pharma products in the online channel outside of Israel, mainly through the Amazon sales platform.

In March 2022, Diplomat exercised an option to purchase an additional 10% in Meditrend, in exchange for approximately NIS 3.8 million.

Diplomat purchased 50% of Meditrend's shares in January of last year and following the exercise of the option, the company now owns approximately 60% of Meditrend's share capital.

The main activity of the Meditrend company is in the import and marketing of non-prescription pharmaceutical products, functional food, food supplements and pre-medical products.

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Source: walla

All business articles on 2023-03-22

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