Strauss Group reports solid results for half year 2020

Strauss Group delivers NIS 4.1 billion in revenue in the first half of 2020, reflecting 4.9% organic growth excluding foreign currency effects; Net profit in the half-year was NIS 306 million, up 4.0%.


Strauss Group reports solid results for half year 2020
Strauss Group reports solid results for half year 2020
17/08/2020

Strauss Group reports solid results for half year 2020

Strauss Group delivers NIS 4.1 billion in revenue in the first half of 2020, reflecting 4.9% organic growth excluding foreign currency effects[1]; Net profit in the half-year was NIS 306 million, up 4.0%   In Q2 the Group delivered NIS 1.94 billion in revenue, reflecting 1.5% organic growth excluding foreign currency effects   Strauss Group CEO, Giora Bardea: “Today we are wrapping up a second quarter that was affected by COVID-19 in its entirety, with solid results achieved in spite of the complex reality. Strauss Group has maintained business stability and financial strength, as reflected in market shares, organic revenue growth, higher gross profit, stronger cash flows and improved cost and structure of debt. “In general, in the past quarter and half-year, an improvement was noted in our various activities in local currency, with businesses catering to in-home consumption benefiting from significant growth, whereas those focusing on away-from-home (AFH) consumption weakened. Following a challenging month in April, we saw a gradual trend of improvement in results in subsequent months, as social and economic restrictions are lifted in most countries. “The strong shekel and ongoing weakening of currencies against the shekel, particularly the Brazilian real, significantly eroded the company’s revenue and profits. “Throughout the crisis, the Group has invested considerably in protecting the safety and health of its employees, in increasing investments in providing help and contributing to the community while maintaining its business operations. This includes new product developments, entry into new categories, acquisitions, ongoing investment in advanced technology and setting up new production sites in Israel and in other countries, as we look forward to emerging from the crisis.”   Strauss Group has wrapped up the second quarter of 2020 with solid results against a backdrop of challenges and positive and negative impacts, most of which are the result of the COVID-19 pandemic. The Group has maintained its high credit rating and has raised capital at attractive interest rates to ensure business continuity. In its retail business the company reported sales growth in most sectors, but the closure of restaurants, hotels and cafés has had a significant negative effect on the Group’s sales in the AFH market, particularly in the coffee business. The depreciation of the Brazilian real against the shekel eroded the company’s revenue. In total, the Group delivered NIS 1.94 billion in revenue in the second quarter, while in the half-year revenue was NIS 4.1 billion, reflecting an increase of around 1.5% and 4.9%, respectively (organic, excluding FX effects) compared to last year. As a result of the weakening currencies, the company reported a drop of around 6.5% in revenue in the quarter and of 1.7% in the half-year, compared to the corresponding periods last year. As mentioned, the main impact on the Group’s revenue in the second quarter was the result of the weakening of the various currencies against the shekel. The foreign currency effect on the company’s sales in the quarter amounted to approximately NIS 164 million, of which NIS 138 million are the result of the depreciation of the Brazilian real against the shekel. In the first half, the foreign currency effect was around NIS 266 million, of which NIS 215 million are due to the weakening of the real against the shekel. In the second quarter, the Group’s gross profit was approximately NIS 743 million, down 9.6% compared to the corresponding period last year, mainly due to the drop in revenue as a result of foreign currency effects. The gross profit margin was 38.4%. Operating profit was NIS 223 million, down 1.6% compared to the corresponding period. The operating profit margin was 11.5%, up 0.5% compared to last year. Net profit (attributed to the shareholders of the company) was NIS 135 million in the quarter compared to NIS 121 million in the corresponding period last year, with the increase attributed to a decrease in tax expenses, which was partially offset by the drop in operating profit. Net profit in the half-year was NIS 306 million, reflecting an increase of 4.0% compared to the first half of 2019.   [1] The data in this document are based on the company's non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses and do not include share-based payment, mark-to-market at end-of-period of open positions in the Group in respect of financial derivatives used to hedge commodity prices and all adjustments necessary to delay recognition of gains and losses arising from commodity derivatives until the date when the inventory is sold to outside parties, other income and expenses, net, and the tax effect of excluding those items, unless stated otherwise.   With the outbreak of COVID-19 the Group formulated a dedicated social program with the aim of helping some of its key stakeholders to cope with the pandemic and its implications. The Group applied a compensation mechanism to strengthen its people who have continued to come in to work despite the complexities involved, with emphasis on “front-line” employees. A loan fund was established to assist the company’s small suppliers. The company also enlarged the scope of its contributions to the community to help populations harmed by the crisis, including donations of food and money to relevant nonprofits as well as through employee volunteering and the distribution of food products to medical teams in Israel, the US, Brazil and Eastern Europe.   Strauss Israel The COVID-19 crisis impacted the activities of Strauss Israel in several ways, from both the operational and business aspects. From the operational aspect, the company invested millions of shekels in protecting and compensating its people, with emphasis on “front-line” employees. The company also increased its manpower quotas for the present time to maximize production capacity and expand its ability to deliver food to all retail customers.   Following the lockdown which began at the end of March and continued until mid-May 2020, demand for products for in-home consumption grew, especially products for cooking and baking at home such as dairy, salads, dips and spreads and chocolate tablets. In parallel, there was a drop in demand for single serve snack products and a shift to larger pack purchases by consumers. The Group’s sales to retail chains grew, among other things in light of a significant increase in online grocery shopping, alongside a drop in sales to the institutional and AFH market (such as hotels, offices, cafés and restaurants). During and after the second quarter (through to the reporting date), demand for the Group’s products has remained high, but has dropped in relation to the demand observed during the outbreak and lockdown phase. In the first half of 2020 the Group held a 12.2% share of the total domestic food and beverage market in Israel (in value terms), compared to 12.0% in the corresponding period in 2019. In parallel, this year the company increased the grant of discounts and campaigns for retailers, and will maintain this policy according to the state of the economy and the implications of the crisis.   In the second quarter Strauss Israel’s sales were approximately NIS 851 million, reflecting 5.9% growth compared to sales in the corresponding period last year. Sales growth was mainly observed in the Health & Wellness segment, in products such as yogurt, dairy desserts, milk beverages, salads and dips and spreads, and washed and cut fresh vegetables. In the Fun & Indulgence segment sales dropped compared to last year, mainly as a result of decreased purchases of salty and sweet snacks, which are usually bought and consumed away from home (“on the go”), a drop in purchases of impulse products and fewer social events such as birthday celebrations and parties. Strauss Israel’s gross profit in the second quarter was approximately NIS 342 million, reflecting an improvement of 8.4% compared to the corresponding period last year, and the operating profit was approximately NIS 98 million.   Strauss Coffee The coffee business results were mixed druing the period and were channel dependant. Sales to the large retail chains rose moderately in the second quarter as consumers in most countries of operations stocked up on basic coffee brands, coffee beans and capsules for home consumption in preparation for lockdowns. Online sales were strong as well. However, sales to the traditional sales channel, which includes stores, groceries and open-air markets, were negatively impacted due to restrictions on opening hours and a drop in customer traffic. Sales to the institutional and AFH market dropped significantly   following discontinuation of the business of hotels, cafés, restaurants, offices and the points of sale of the Elite Café chain in Israel. The coffee company’s total revenue in the past quarter was approximately NIS 750 million, 0.8% less than revenue in the corresponding period last year (organic, excluding currency effects), but the erosion of the Brazilian real against the shekel had a material impact on income translated into shekels, which recorded a drop of 17.9%.   A breakdown by country demonstrates high variance: The business in Brazil grew by around 9.5% in local currency, and in the half-year, the market share of the coffee company in Brazil (Três Corações) was 28.0% compared to 28.3% in the corresponding period. In Poland, 16.9% sales growth in local currency was recorded in the quarter, but the weakening of the zloty negatively impacted sales by approximately NIS 6 million, such that growth in the quarter was 6.4%. In Israel and Romania, where AFH business is significant, revenue dropped, whereas in Russia and Ukraine, where AFH activities are on a small scale, revenue in local currency increased.   Sabra and Obela (100%) Of all of the Group’s businesses, in the second quarter Sabra’s activity suffered significant harm to its supply chain as a result of COVID-19, which made it difficult to fully supply demand for the company’s products. Another impact of the crisis was a reduction in sales to convenience stores, groceries and AFH sales. The company’s total revenue in the second quarter was approximately NIS 319 million, constituting a drop of 9.0% compared to the corresponding period in local currency. It is worth noting that in the second quarter and first half the US hummus market grew, but due to the production shortages experienced by Sabra, the company could not benefit from this growth. Nevertheless, Sabra’s market share in the half-year was 62.6%, higher than its market share in the corresponding half in 2019, which was 61.5%. The weakening of the dollar against the shekel constrained Sabra’s sales by approximately NIS 8 million, meaning that on translation into shekels Sabra recorded a drop of 10.9% in revenue. The operating profit fell by around 31.2% to NIS 41 million as a result of the drop in sales, a change in the sales mix, and the company’s expenses resulting from the adaptation of manufacturing and logistics sites to accommodate the effects of COVID-19. Obela’s sales in the quarter were approximately NIS 36 million compared to NIS 38 million in the corresponding period in 2019, reflecting a drop of 4.0%. However, excluding foreign currency effects, the company delivered 5.1% sales growth.   Strauss Water In the second quarter, Strauss Water’s business in Israel experienced a gradual return to activity levels prior to the crisis and was influenced mainly by growth in the customer base, which was countered by a drop in the number of new appliances. The company’s operation in China in the quarter was affected by the process of emerging from the lockdown, which led to a recovery in sales. The second quarter saw growth in online sales in China.   In total, Strauss Water wrapped up the second quarter with NIS 159 million in revenue, an increase of around 0.7% over last year, in spite of the restrictions on movement and the lockdowns in its countries of operations. Operating profit was approximately NIS 30 million compared to NIS 19 million in the corresponding period, due, among other things, to recognition of a development grant for the construction of the new manufacturing facility in China, which the company began building with an investment of 375 million yuan. The revenue of HSW in China amounted to approximately NIS 139 million in the quarter compared to NIS 141 million in the corresponding period last year, reflecting a slight drop of 1.3%. Excluding the currency impact, sales grew by 4.9%.   Key financial data for the half-year ended June 30 – non-GAAP (NIS millions)*: *Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands.   Key financial data for the quarter ended June 30 – non-GAAP (NIS millions)*: * Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands.   The data in this document are based on the company's non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses and do not include share-based payment, mark-to-market at end-of-period of open positions in the Group in respect of financial derivatives used to hedge commodity prices and all adjustments necessary to delay recognition of gains and losses arising from commodity derivatives until the date when the inventory is sold to outside parties, other income and expenses, net, and the tax effect of excluding those items, unless stated otherwise. Investments include the acquisition of fixed assets and investment in intangible assets. Note: Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands.   The data in this document are based on the company's non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses and do not include share-based payment, mark-to-market at end-of-period of open positions in the Group in respect of financial derivatives used to hedge commodity prices and all adjustments necessary to delay recognition of gains and losses arising from commodity derivatives until the date when the inventory is sold to outside parties, other income and expenses, net, and the tax effect of excluding those items, unless stated otherwise. Fun & Indulgence figures include Strauss’s 50% share in the salty snacks business. International Coffee figures include Strauss’s 50% share in the Três Corações joint venture (3C) – Brazil – a company jointly held by the Group (50%) and by the local São Miguel Group (50%). International Dips & Spreads figures reflect Strauss’s 50% share in Sabra and Obela. Strauss Water EBIT figures include Strauss’s share in Haier Strauss Water (HSW) in China (49%).   Note: Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands. Total figures for International Dips & Spreads were calculated on the basis of the exact figures for Sabra and Obela in NIS thousands.   The data in this document are based on the company's non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses and do not include share-based payment, mark-to-market at end-of-period of open positions in the Group in respect of financial derivatives used to hedge commodity prices and all adjustments necessary to delay recognition of gains and losses arising from commodity derivatives until the date when the inventory is sold to outside parties, other income and expenses, net, and the tax effect of excluding those items, unless stated otherwise. Investments include the acquisition of fixed assets and investment in intangible assets. Note: Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands.   The data in this document are based on the company's non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses and do not include share-based payment, mark-to-market at end-of-period of open positions in the Group in respect of financial derivatives used to hedge commodity prices and all adjustments necessary to delay recognition of gains and losses arising from commodity derivatives until the date when the inventory is sold to outside parties, other income and expenses, net, and the tax effect of excluding those items, unless stated otherwise.   Fun & Indulgence figures include Strauss’s 50% share in the salty snacks business. International Coffee figures include Strauss’s 50% share in the Três Corações joint venture (3C) – Brazil – a company jointly held by the Group (50%) and by the local São Miguel Group (50%). International Dips & Spreads figures reflect Strauss’s 50% share in Sabra and Obela. Strauss Water EBIT figures include Strauss’s share in Haier Strauss Water (HSW) in China (49%). Note: Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands. Total figures for International Dips & Spreads were calculated on the basis of the exact figures for Sabra and Obela in NIS thousands. Note: Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands. Conference Call Strauss Group will host a conference call in Hebrew on Monday, August 17, 2020 at 14:00 (Israel time) with the participation of company management to review the financial statements of the company for the second quarter of 2020. To participate in the conference call in Hebrew, dial 03-918-0685.   Strauss Group will also host a conference call in English on Monday, August 17, 2020 at 16:00 (Israel time) (14:00 UK, 09:00 EST) with the participation of company management to review the financial statements of the company for the second quarter of 2020.   To participate in the conference call in English, please call one of the following numbers as appropriate: UK: 0-800-917-5108 US: 1-888-281-1167 Israel: 03-918-0687   A recording of the calls will subsequently be available on the company’s website at: https://ir.strauss-group.com/company-presentations/conference-call-recordings/   The financial statements for the second quarter of 2020 and the presentation that will accompany the calls will be available prior to the conference calls on the following websites: https://ir.strauss-group.com/company-presentations/quarterly-presentations/ https://ir.strauss-group.com/earning-releases/     For further information please contact: Osnat Golan VP Communications, Corporate Brand & Sustainability Strauss Group Ltd. 972-52-828-8111 972-3-675-2281 Osnat.Golan@Strauss-Group.com Daniella Finn Director of Investor Relations Strauss Group Ltd. 972-54-577-2195 972-3-675-2545 Daniella.Finn@Strauss-Group.com  Or   Shlomi Sheffer External Communications Director Strauss Group Ltd. 972-50-620-8000 972-3-675-6713 Shlomi.Sheffer@Strauss-Group.com    
5 important guidelines to advance inclusion
05/08/2020

5 important guidelines to advance inclusion

Noga Segev Nadir Talent Management Director, Human Resources.   I’ve practiced Tai Chi for a few years. I remember myself looking at the instructor, listening to his instructions, imitating the movements in what seemed to me like a superb combination of imagination and talent, and feeling good about myself with the achievements of body and soul alike.   All this was true – until the exercises in pairs began. I always found these exercises to be an interruption to the good, meditative order of my movement with myself. Tai Chi pair exercises are a kind of highly-synchronized movement, with a very gentle touch – sort of touching -and-not-really-touching, forehand to backhand. The same movements performed in a pair. When one person moves forward, the other moves back, and vice versa. Only then did I understand, that I had done wrong some of the exercises previously performed alone. Only by gently touching the other could I feel the discomfort in the mirror that was put in front of my blind spots. The same movement took on a whole new meaning with someone else, but with a different challenge and quality. The essence stopped being my own movement with myself, and started being the joint, harmonious creation, which none of us could have created alone. For me, that is the true experience of inclusion. The seemingly liberal person that I am, is so aware of herself, gives each and every one around her an equal chance, and does not judge by external appearance, religion, ethnic origin, gender, etc. But only during moments of gentle contact – not necessarily a tough and conflictual one – I become aware of what I usually don’t experience: my unconscious biases towards those who are like me, my judgmental tendencies which must be pushed aside, the desire for someone to be like me, instead of the willingness to adapt. Only then do I see how open I truly am for creating a new story – together. “Inclusion” means inviting someone over, having them join you inside. And I am not even sure I want to have someone over. Maybe it would be better to create something new together and having both parties keep what is dear and important to them. And if that is true inclusion, how does one promote it in the organization? In the business unit that has a shared purpose? in every place where results play a critical role, as does a focused, goal-oriented language? Strauss’ decade-long journey, which is still underway, has taught me five important guidelines in advancing inclusion. Things that happen in parallel, in the organization as a whole, and in every single person individually. I was tempted to organize them in numbers and put periods at the end, but in fact, they can not be numbered, and they are far from being absolute truths. Patience – there is no swift move, in which a great, orchestrated effort is made, and the result miraculously appears. Awareness and openness are very slowly built, with great effort. One more voice gets to be heard center stage, and then another, and then another. More and more people get a chance to look at their biases and to consciously make a different choice. There are ripple effects, ones that are not often seen, but rather accelerate underwater and emerge when the time comes. Bandwidth – a critical mass needs to be created, working in parallel on processes, awareness, skills, communication, rewards, top-down, bottom-up, sideways… and the list goes on and on… Modesty and openness – understanding that we probably don’t understand is critical. Once we know this, we take careful steps, so that we can manage the cost of making mistakes. This is important, because our mistakes influence people careers and wellbeing. We can not do this without listening to things that are less pleasant. We must assume that we do not have all the answers. Curiosity and a willingness to change – we will not bring here people who are different than us, only to make them like us. So let’s learn, take something from them, change ourselves, and explore further. Different people and communities bring different stories with them. Becoming familiar with these stories creates a common language and value to all those involved. Inclusion outside the comfort zone – inclusion must happen not in those places where it is easy for us to include, but in meaningful places, such as the decision-making table. Are all populations represented in places that are critical to the organization? Can all voices really make an impact? Organizations don’t talk about “diversity and inclusion” these days, but the other way around – “inclusion and diversity”. Diversity happens from the outside inwards; inclusion happens the other way – from the inside outwards. Our existence as a business depends on our ability to truly include – those who consume our products, those who supply to us, those who partner with us, those who work for us and have diverse skills – any one of our stakeholders. Moreover, our existence as a society and as human beings depends on our ability to include. Developing mangers as inclusive leaders is a lot more than “simple” gender balance, or the integration of the Arab-Israelis or people with disability. In today’s world, inclusion is a managerial tool of the utmost importance, in a world where it is very hard to listen, and in a world in which there is a great role for listening. In a world where we are all different and all similar. In a world where wisdom and knowledge are not the privilege of one person alone. In a world where the ability to work with someone who is different than me and the ability to change are key to resilience and success over time. Organizational inclusion is at the end of the day many encounters between people. And in that encounter, in that movement which is almost a dance, in that pair exercise in Tai Chi, something common is created and each one of us learns about himself or herself, and brings all of himself/herself, in all colors, in the delicate interface between the inside and the outside.  
How to fall in love with our food ?
05/08/2020

How to fall in love with our food ?

Michal Benishti, Head of Gastronomy and Nutrition Division at Strauss Group, shares her thoughts about food and explains how the most basic thing turned so complicated and what you can do to live a healthy life while enjoying our food This week, as I often do, I went to my neighborhood shopping center and suddenly It hit me. This shopping center that was packed with all sorts of shops up until a few years back, has turned lately to an all food establishment. Just food. From every kind. Specialty deli, Greek bakery, Italian restaurant, herbs shop, beverage shop and much more. No doubt a culinary festival. combine this with numerous other trends that keep popping up such as “low carbs”, “keto” “gluten free”, “clean eating”, “organic” and so on and you get a society that is obsessed with food on all its layers and formations.   How can one survive all this information and diversity of food and have value from it – mentally and health wise? I suggest 3 new ways to think about our food, enjoy what it has to offer and eat it in a way that is responsible for the world and our body;   1.Variety and moderation. As do all things in life, it’s all about balance. We all know that if we eat a lot of candy it probably won’t be best for our body. But what happens if we only eat super foods? Would that give us strength and immunity forever? Probably not. The key to real health of body and soul is variety and moderation. Eat everything local agriculture has to offer and yet listen to our bodies and not exaggerate. True, it isn’t simple, it takes practice and awareness to our bodies. It’s not some magic formula that promises health if you only eat certain food at certain times. But it is the only way you can combine both worlds – enjoy your food and be nourished by it.   2. Know your food. Knowing your food means know things about it because food matters. It means something. it is a part of our survival on this planet and it also affects our environment and shapes our economy, our society and basically every dimension in our lives. Once we understand its many implications we care where our food comes from, who made it and how. The answer to all those questions will grant us better and deeper understanding with our food. We will feel more connected to our food, be more engaged with it and eat food with a sense of identity and feel something about it. Eventually the result Is that we eat better and more consciously.   3. Food as a source of pleasure and not a “risk factor”. Sometimes it feels like we are only told what not to eat. Don’t eat too much sugar, don’t eat too much salt, don’t eat too much saturated fat. All of these “no’s” take us to a world in which we see food as a risk factor for disease, for poor quality of life, for obesity and so on. This is less than optimal way of looking at our food. I suggest we look at food positively. As an opportunity for enjoyment, to experience different cultures, to improve our health and quality of life. If we look at food in that way, I believe we will have great food and have something more we enjoy doing.   Eventually you can see that there are two kinds of people – those who eat to survive and those who eat to enjoy. Those who see food as a means for survival and those who see food as happiness, joy, wants to understand where food comes from, explore new tastes and a variety of dishes. They also know when to balance, when comes the time to eat a light snack and when to eat something “heavier” because they listen to their bodies. Let’s learn to fall in love with our food and acquire physical health and a healthy relationship with food at the same time– that thing we consume multiple times a day, every day, all our lives.