In a report of the financial statements of the Strauss Group that came out this morning, the Strauss Group updated the assessment of the damage to the net profit for 2022 due to the recall event and the shutdown of the plant to the extent that it will cost between NIS 310-290 million.
Despite this, in the last quarter the Strauss Group registered a jump in its profits.
The group published this morning (Monday) the financial statements for the third quarter of 2022. In the quarter, the company recorded a 17% increase in revenues, which amounted to a total of approximately NIS 2.5 billion.
In the first nine months of 2022, revenues totaled approximately NIS 7 billion, an increase of approximately 17.6%.
The growth is mainly due to the increase in sales of the Strauss coffee company products in Brazil and Eastern Europe as well as the continued growth of the water company.
However, the increase was inhibited in light of the decrease in sales of the sweets division in Israel and the Sabra company, which operated partially in recent months.
The reasons for the damage to the activity in Israel are the consequences of the recall event, the adjustment plan in Sabra and also the increase in the prices of raw materials, mainly raw milk.
Also, packaging prices and transportation costs eroded by approximately 9.9% the gross profitability of the company which amounted to approximately NIS 746 million in the quarter and a gross profitability rate of approximately 30%. The operating profit in the quarter was also eroded due to these reasons and amounted to approximately NIS 111 million , a decrease of approximately 63.3% compared to the corresponding quarter last year. The profit for the shareholders in the quarter amounted to approximately NIS 35 million, a decrease of approximately 82.4% compared to the corresponding quarter last year.
The cost of the recall to the Strauss group - NIS 310-290 million (for illustration), photo: Gideon Markowitz
The group reported that alongside strong growth in the coffee business in Brazil and Europe as in all other businesses in Israel with the exception of sweets, the group faces continued significant increases in the prices of raw materials that erode profitability.
The chocolate factory in Nof HaGalil returned to production after the salmonella incident and the company is returning the products to the shelves.
Strauss Israel ended the quarter with revenues of approximately NIS 871 million, a decrease of approximately 10.7%, which is mainly due to a decrease of approximately 47% in sales from the pleasure and enjoyment sector, which totaled approximately NIS 143 million in the quarter due to the consequences of the recall event in the candy division .
Strauss Coffee enjoyed an excellent quarter that amounted to revenues of approximately 1.3 billion NIS and growth in all countries that amounted to 37.3%. In Israel, revenues totaled approximately 200 million NIS and grew by approximately 15.7% compared to the corresponding quarter last year.
In Brazil, there was a jump of about 33.6% in sales, which amount to 697 million shekels, mainly due to a price update carried out this year.
The activity in Europe recorded a particularly successful quarter when sales in Russia and Ukraine grew by 67% and in Poland by 23.5%.
Bestraus stated that its American branch, the Sabra company, continues the process of improvement and return to consumers' homes after the implementation of the adaptation plan at the factory in Virginia.
The company, whose operations were significantly shut down during the first half, has returned to full production and has already regained about 34.8% of the hummus market share in the US, when previously it held about 61% of the market. The volume of sales in the third quarter was NIS 82 million, a decrease of 47.6% and the loss The operating cost was NIS 36 million.
The company estimates that Sabra will end the fourth quarter in operational balance.
CEO of the Strauss Group, Giora Bar-Dea: "The resilience of the group makes it possible to continue implementing the strategic plan" (archive), photo: Yehoshua Yosef
Strauss Water continues to grow impressively even in the third quarter.
The company recorded revenues of approximately NIS 210 million, an increase of 9.1% which was mainly due to an increase in the number of customers and an increase in the sale of new devices.
The activity in China is still affected by closures due to the Corona and grew in the third quarter by 4.7% to NIS 161 million.
In addition, the activity in the UK is expanding and the company recently launched there the new and advanced water bars from the edge series.
According to Giora Bar-Dea, CEO of the Strauss Group: "The Strauss Group is showing growth in most of its businesses, except for the candy category in Israel and the international dips and spreads field of activity.
Alongside this, dealing with inflation and significant increases in the prices of raw materials, as well as the gradual return of Sabra to the market and the halting of activities in sweets led to an erosion of the group's profitability.
Strauss Coffee ends a quarter with strong performance, Strauss Water with impressive growth and Strauss' food and beverage operations in Israel maintain their market shares and continue to grow nicely.
The strength of the group allows us to continue consistently with the implementation of the strategic plan published in March of this year.
We announced the extension of the partnership agreement with the Lima family in Brazil for another 20 years and launched the group's structural change plan in the geography of Israel.
These days, I will transfer the leadership of the team to Shai Babad and assist him in taking office."
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