Strauss Group posts 1.3% organic sales growth, excluding foreign currency effects⁽[1]⁾, and net profit erosion⁽[2]⁾

Gadi Lesin, President and Chief Executive Officer of Strauss Group, said today (August 20, 2015): “A combination of macroeconomic events in several companies and regions and a number of specific events (recall of hummus cases by Sabra in the US, the debt settlement with Mega Retail in Israel and an impairment provision in Serbia) have led to erosion of the Group’s operating and net profit, compared to a strong corresponding quarter. The Group is implementing streamlining measures along the entire value chain, including production, supply chain and cost cutting at the corporate center. In parallel, the Group continues to implement its global expansion strategy, which includes completion of the restructuring of the Haier Strauss Water joint venture in China and the continued development of the TRES solution, under which Três Corações joint venture in Brazil⁽³⁾ is active in the single portion multi-beverage machines and capsules segment.”

H1 2015 highlights (2)

• Organic sales growth, excluding the foreign exchange effects, was 1.3% ⁽¹⁾. Shekel sales were NIS 3.8 billion compared to NIS 3.9 billion in the corresponding quarter last year, and reflected NIS 185 million negative translation differences as a result of the continued strengthening of the NIS versus other functional currencies of the Group.
• Gross profit was NIS 1,418 million (37.6% of sales), down 9.0% compared to the corresponding period last year. Gross margins were down 2.1%.
• Operating profit (EBIT) was NIS 309 million (8.2% of sales), down 17.9% compared to the corresponding quarter last year. EBIT margins were down 1.4%.
• EPS for shareholders of the company was NIS 1.24 per share, down 21.2% compared to the corresponding period.
• Cash flows from operating activities totaled NIS 30 million, compared to NIS 128 million last year.

^([1])             Also excluding the impact of classification of costs following the introduction of the Food Law, as explained in the Board of Directors Report.

⁽²⁾                    Based on non-GAAP data, which include the proportionate consolidation of jointly-held partnerships (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period and other income and expenses, unless stated otherwise.

⁽³⁾             Três Corações (3C) – Brazil – a company jointly held by the Group (50%) and by a local holding company, São Miguel Holding e Investimentos S.A. (50%).

• Based on non-GAAP data, which include the proportionate consolidation of jointly-held partnerships (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period and other income and expenses, unless stated otherwise.

• Investments include the acquisition of fixed assets and investment in intangibles and deferred expenses.

Note: Financial data were rounded off to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands.

• Based on non-GAAP data, which include the proportionate consolidation of jointly-held partnerships (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period and other income and expenses, unless stated otherwise.

• Fun & Indulgence figures include Strauss 50% share in the salty snacks business. International Coffee figures include Strauss 50% share in Três Corações Joint Venture (3C) – Brazil – a company jointly held by the Group (50%) and by the São Miguel Group (50%). International D&S figures reflect Strauss 50% share in Sabra and Obela. Other includes Strauss share in Strauss Water China.

Note: Financial data were rounded off to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands.

Q2 2015 highlights (1)

• Organic sales growth, excluding the foreign exchange effects, was 0.6% ⁽²⁾. Shekel sales were NIS 1.8 billion compared to NIS 1.9 billion in the corresponding quarter last year, and reflected NIS 118 million negative translation differences as a result of the continued strengthening of the NIS versus other functional currencies of the Group.
• Gross profit was NIS 689 million (37.4% of sales), down 10.5% compared to the corresponding period last year. Gross margins were down 2.0%.
• Operating profit (EBIT) was NIS 112 million (6.1% of sales), down 35.3% compared to the corresponding quarter last year. EBIT margins were down 2.8%.
• EPS for shareholders of the company was NIS 0.29 per share, down 54.3% compared to the corresponding period.
• Cash flows from operating activities totaled NIS 180 million, compared to NIS 113 million last year.

• Based on non-GAAP data, which include the proportionate consolidation of jointly-held partnerships (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period and other income and expenses, unless stated otherwise.
• Also excluding the impact of classification of costs following the introduction of the Food Law, as explained in the Board of Directors Report.

• Based on non-GAAP data, which include the proportionate consolidation of jointly-held partnerships (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period and other income and expenses, unless stated otherwise.

• Investments include the acquisition of fixed assets and investment in intangibles and deferred expenses.

Note: Financial data were rounded off to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands.

• Based on non-GAAP data, which include the proportionate consolidation of jointly-held partnerships (without implementation of IFRS 11) and do not include share-based payment, valuation of the balance of commodity hedging transactions as at end-of-period and other income and expenses, unless stated otherwise.

• Fun & Indulgence figures include Strauss 50% share in the salty snacks business. International Coffee figures include Strauss 50% share in Três Corações Joint Venture (3C) – Brazil – a company jointly held by the Group (50%) and by the São Miguel Group (50%). International D&S figures reflect Strauss 50% share in Sabra and Obela. Other includes Strauss share in Strauss Water China.

Note: Financial data were rounded off to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands.

Appendix

For further information please contact:

Talia Sessler

Investor Relations Director

Strauss Group Ltd.

972-54-577-2195

972-3-675-2545

talia.sessler@strauss-group.com

Osnat Golan

VP Communications & Digital, Spokesperson

Strauss Group Ltd.

972-52-828-8111

972-3-675-2281

Gil Messing

External Communications Director

Strauss Group Ltd.

972-54-252-5272