Strauss Group wraps up Q3 2022 with NIS 2.5 billion in revenue, 7% organic growth, and a decline in operating profit.
While achieving strong growth in the coffee business in Brazil and Europe as well as all other businesses in Israel excluding confectionery, the Group has contended with ongoing significant increases in raw material prices, which have eroded margins; The chocolate production site in Nof Hagalil has restarted manufacturing, and the Company is preparing to restock shelves;
Sabra has resumed full production and is growing its market share in the USA.

This morning, Strauss Group published its financial statements for the third quarter of 2022. In the quarter, the Company recorded an increase of 7%1 in revenue, which amounted to NIS 2.5 billion. In the first nine months of 2022, revenue totaled NIS 7 billion, up 7.6%1. The increase is largely due to sales growth in the coffee company in Brazil and Eastern Europe as well as continued growth in the water company but was offset by the drop in sales by the Confectionery Division and Sabra, both of which operated partially in the past several months.

The consequences of the confectionary recall and the adjustment plan in Sabra, as well as the rising costs of raw materials, mainly raw milk, green coffee, packaging materials, and shipping and transportation costs, led to a 9.9% drop in gross profit, which was NIS 746 million in the quarter (gross margin of 30%). These circumstances also caused a drop in operating profit, which amounted to NIS 111 million, down 63.3% compared to the corresponding period last year. Income attributable to shareholders in the quarter was NIS 35 million, reflecting a drop of 82.4% compared to the corresponding quarter of 2021.

In an immediate report issued this morning, the company updated the estimated damage to its net profit for 2022 due to the recall event and the shutdown of the plant to a range of NIS 290-310 million.

Giora Bardea, Strauss Group CEO: “Strauss Group delivered growth in most of its businesses, other than the confectionery category in Israel and International Dips & Spreads. At the same time, coping with inflation and considerable increases in raw material prices, as well as Sabra’s gradual return to the market and the suspension of confectionery operations have led to margin erosion. Strauss Coffee posted a quarter of strong performance, Strauss Water is growing admirably, and Strauss’s food and beverage business in Israel, excluding confectionary, is maintaining market share and continues to grow nicely. In recent weeks, we have continued to implement the strategic plan we announced last March. We also announced the extension of our partnership agreement with the Lima family in Brazil for another twenty years and kicked off the Group’s restructuring plan in the Israel geograph. I am currently handing over leadership of the Group to Shai Babad and will assist him in assuming the position.”

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Conference Call

Strauss Group will host a Zoom conference call in Hebrew on Monday, November 28, 2022 at 14:00 (Israel time) with the participation of company management to review the financial statements of the company for the third quarter of 2022. Following is information for those wishing to join the conference:

Strauss Group will also host a Zoom conference call in English on Monday, November 28, 2022 at 15:30 (Israel time) (13:30 UK, 08:30 EST) with the participation of company management to review the financial statements of the company for the second quarter of 2022.

A recording of the calls will subsequently be available on the company’s website at:

http://ir.strauss-group.com/phoenix.zhtml?c=92539&p=irol-conferencecalls

The financial statements of the company for the fourth quarter and full year 2021 and the presentation that will accompany the conferences will be available prior to the conference calls on the following websites:

http://www.tase.co.il

http://www.magna.isa.gov.il

http://ir.strauss-group.com/phoenix.zhtml?c=92539&p=irol-irhome

For further information, please contact: