Strauss Group Announces Results For Second Quarter And First Half 2013

POSTS 4.2% SALES GROWTH AND 48.0% OPERATING PROFIT GROWTH IN SECOND QUARTER 2013, MAINLY THANKS TO THE GROUP'S INTERNATIONAL OPERATIONS (1)
Sales grew in all segments of the Group's activity; strong growth in Strauss Israel sales, which rose by 6.2% compared to the corresponding quarter last year
Strauss Coffee and the International Dips and Spreads Operation continued to show strong results as the assimilation of streamlining processes and accelerated investments in innovation continued

PR Newswire

TEL AVIV, Israel, Aug. 20, 2013 /PRNewswire/ -- Gadi Lesin, President and Chief Executive Officer of the Strauss Group (STRS.TA), said today, "The Group continued to post strong performance in the quarter and top-line growth in all activity segments, particularly Strauss Israel. Focused strategy, innovation, investment in strengthening our brands and smart cost management also led to significant growth in the Group's operating and net profit."

Implementation of IFRS 11 – Joint Arrangements

Commencing in the first quarter of 2013 Strauss Group has applied IFRS 11 – Joint Arrangements. The significance of the standard is that businesses which are jointly controlled by Strauss and a partner are no longer presented according to Strauss's relative holding in the entity, but in a separate row ("Income of equity-accounted investees" in the statements of income and in the other statements in the relevant section). The reporting method does not alter the Group's profit. As this is a change in reporting method only, and in light of the fact that the Group's non-GAAP reports and the manner in which Management measures the results of operations of subsidiaries and the jointly owned companies have remained unchanged, the Group continues to present the activity segments in the identical manner in which they were presented in prior periods.

Key data on the second quarter of 2013 and as at June 30, 2013 (1)

  • Sales totaled NIS 2.0 billion (NIS 1.9 billion last year), an increase of 4.2%; excluding the impact of changes in exchange rates, organic sales grew by 8.2% over last year.
  • Non-GAAP gross profit totaled NIS 751 million (37.2% of sales) compared to NIS 665 million in the corresponding quarter last year (34.3% of sales), an increase of 13.0%.
  • Non-GAAP operating profit (EBIT) totaled NIS 185 million (9.1% of sales) compared to NIS 125 million in the corresponding quarter last year (6.4% of sales), an increase of 48.0%. The growth was primarily due to the significant growth in the profits of the Group's international operations.
  • Non-GAAP net income attributable to the Company's shareholders totaled NIS 75 million (3.7% of sales) compared to NIS 35 million in the corresponding quarter last year (1.8% of sales), an increase of 117.2%.
  • Cash flows from operating activities (non-GAAP) amounted to a positive cash flow of NIS 236 million compared to a positive cash flow of NIS 250 million in the corresponding quarter last year.
  • Net credit (non-GAAP) as at June 30, 2013 totaled NIS 1,403 million (compared to NIS 1,679 million on June 30, 2012 and NIS 1,422 million on December 31, 2012).

Key data on the first half of 2013 and as at June 30, 2013 (1)

  • Sales totaled NIS 4.0 billion (NIS 4.0 billion in the corresponding half last year), an increase of 0.7%; excluding the impact of changes in exchange rates, organic sales grew by 4.3%.
  • Non-GAAP gross profit totaled NIS 1,518 million (37.7% of sales) compared to NIS 1,396 million in the corresponding half last year (34.9% of sales), an increase of 8.8%.
  • Non-GAAP operating profit (EBIT) totaled NIS 399 million (9.9% of sales) compared to NIS 293 million in the corresponding half last year (7.3% of sales), an increase of 36.3%, primarily as a result of the significant growth in the profits of the Group's international operations.
  • Non-GAAP net income attributable to the Company's shareholders totaled NIS 178 million (4.4% of sales) compared to NIS 100 million in the corresponding half last year (2.5% of sales), an increase of 77.9%.
  • Cash flows from operating activities (non-GAAP) amounted to a positive cash flow of NIS 234 million compared to a positive cash flow of NIS 233 million in the corresponding half last year.
  • Net credit (non-GAAP) as at June 30, 2013 totaled NIS 1,403 million (compared to NIS 1,679 million on June 30, 2012 and NIS 1,422 million on December 31, 2012).

(1) 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

Following are the condensed results of business operations (based on the Company's non-GAAP management reports) for the quarter and the half ended June 30, 2013 and 2012 (in NIS millions)*:

 


First Half

Second Quarter


2013

2012

% Chg

2013

2012

% Chg

Sales

4,029

4,001

0.7

2,016

1,936

4.2

Cost of sales

2,511

2,605

(3.6)

1,265

1,271

(0.5)

Gross profit – non-GAAP

1,518

1,396

8.8

751

665

13.0

% of sales

37.7%

34.9%


37.2%

34.3%


Selling and marketing expenses

908

897

1.2

461

441

4.4

General and administrative expenses

211

206

2.6

105

99

7.3

Operating profit – non-GAAP

399

293

36.3

185

125

48.0

% of sales

9.9%

7.3%


9.1%

6.4%


Financing expenses, net

(62)

(68)

(9.2)

(36)

(28)

26.7

Income before taxes on income

337

225

49.9

149

97

54.2

Taxes on income

(103)

(83)

23.5

(47)

(39)

19.8

Effective tax rate

30.7%

37.3%


31.7%

40.8%


Income for the period – non-GAAP

234

142

65.7

102

58

77.9

Attributable to:

The Company's shareholders

 

178

 

100

 

77.9

 

75

 

35

 

117.2

Non-controlling interests

56

42

35.9

27

23

18.1

 

Following are the condensed results of business operations (based on non-GAAP management reports) of the major business sectors for the quarter and the half ended June 30, 2013 and 2012 (in NIS millions)*:

 


First Half

Second Quarter


2013

2012

%  Chg

2013

2012

%  Chg

Israel







Net sales

1,483

1,455

1.9

727

683

6.2

Operating profit

162

155

4.2

68

63

6.9

EBITDA

200

192

4.0

87

81

6.1

Coffee







Net sales 

1,981

2,032

(2.5)

992

984

0.9

Operating profit

210

135

56.2

99

58

71.6

EBITDA

247

173

43.2

116

79

48.3

International Dips and Spreads







Net sales

293

243

20.6

159

131

22.0

Operating profit

24

17

43.2

17

14

28.0

EBITDA

34

27

28.7

22

19

20.4

Other







Net sales

272

271

0.8

138

138

1.3

Operating profit (loss)

3

(14)


1

(10)


EBITDA

28

13

130.2

14

5

245.2

Total







Net sales  

4,029

4,001

0.7

2,016

1,936

4.2

Operating profit

399

293

36.3

185

125

48.0

EBITDA

509

405

26.3

239

184

31.1

 

* Financial data were rounded off to NIS millions. The percentages change were calculated on the basis of the exact figures in NIS thousands.

 

Following are the condensed financial accounting statements of income (GAAP) for the quarter and the half ended June 30, 2013 and 2012 (in NIS millions)*:

 


First Half

Second Quarter


2013

2012

% Chg

2013

2012

% Chg

Sales

2,752

2,811

(2.1)

1,334

1,343

(0.7)

Cost of sales excluding impact of hedging

   transactions

 

1,675

 

1,740

 

(3.7)

 

821

 

848

 

(3.2)

Valuation of balance of commodity hedging

   transactions as at end of period

 

17

 

(16)


 

35

 

(14)


Cost of sales

1,692

1,724

(1.9)

856

834

2.6

Gross profit

1,060

1,087

(2.5)

478

509

(6.1)

% of sales

38.5%

38.7%


35.8%

37.9%


Selling and marketing expenses

650

658

(1.1)

331

323

2.9

General and administrative expenses

159

158

0.7

79

76

4.3

Operating profit before other income

   (expenses)

 

251

 

271

 

(7.7)

 

68

 

110

 

(39.3)

% of sales

9.1%

9.7%


5.0%

8.2%


Other income (expenses), net

(2)

(8)


(5)

1


Operating profit after other income

   (expenses)

 

249

 

263

 

(5.3)

 

63

 

111

 

(44.0)

Financing expenses, net

(50)

(56)

(12.7)

(29)

(22)

24.0

Share in income (losses) of equity-accounted

   investees

 

87

 

7


 

56

 

9


Income before taxes on income

286

214

34.3

90

98

(8.2)

Taxes on income

(86)

(74)

17.2

(30)

(32)

(5.1)

Effective tax rate

30.2%

34.6%


33.9%

32.8%


Income for the period

200

140

43.5

60

66

(9.7)

Attributable to:

The Company's shareholders

 

151

 

98

 

53.5

 

43

 

41

 

2.1

Non-controlling interests

49

42

19.2

17

25

(29.2)

 

* Financial data were rounded off to NIS millions. The percentages change were calculated on the basis of the exact figures in NIS thousands.

 

Following are the adjustments to the Company's non-GAAP management reports (NIS millions)*:

- Adjustments for IFRS 11 – change from the equity method in the GAAP report to the proportionate consolidation method (according to the segmental information based on the Group's management accounting (non-GAAP) and internal reports):

 


First Half 2013

First Half 2012

Second Quarter 2013

Second Quarter 2012


 

 

 

Equity method

 

 

 

Change

Propor-tionate consoli-dation method (applied to date)

 

 

 

Equity method

 

 

 

Change

Proportion-
ate conso-
lidation
method (as
published
before
IFRS 11
took effect)

 

 

 

Equity method

 

 

 

Change

Propor-tionate consoli-dation method (applied to date)

 

 

 

Equity method

 

 

 

Change

Proportion-
ate conso-
lidation
method (as
published
before
IFRS 11
took effect)

Sales

2,752

1,277

4,029

2,811

1,190

4,001

1,334

682

2,016

1,343

593

1,936

Cost of sales excluding impact of hedging

   transactions

 

1,675

 

836

 

2,511

 

1,740

 

865

 

2,605

 

821

 

444

 

1,265

 

848

 

423

 

1,271

Valuation of balance of commodity hedging

   transactions as at end of period

 

17

 

-

 

17

 

(16)

 

-

 

(16)

 

35

 

-

 

35

 

(14)

 

-

 

(14)

Cost of sales

1,692

836

2,528

1,742

865

2,589

856

444

1,300

834

423

1,257

Gross profit

1,060

441

1,501

1,087

325

1,412

478

238

716

509

170

679

% of sales

38.5%


37.3%

38.7%


35.3%

35.8%


35.5%

37.9%


35.1%

Selling and marketing expenses

650

258

908

658

239

897

331

130

461

323

118

441

General and administrative expenses

159

62

221

158

57

215

79

31

110

76

28

104

Operating profit before other income

   (expenses)

 

251

 

121

 

372

 

271

 

29

 

300

 

68

 

77

 

145

 

110

 

24

 

134

% of sales

9.1%


9.2%

9.7%


7.5%

5.0%


7.2%

8.2%


6.9%

Other income (expenses), net

(2)

(1)

(3)

(8)

-

(8)

(5)

(1)

(6)

1

-

1

Operating profit after other income

   (expenses)

 

249

 

120

 

369

 

263

 

29

 

292

 

63

 

76

 

139

 

111

 

24

 

135

Financing expenses, net

(50)

(12)

(62)

(56)

(12)

(68)

(29)

(7)

(36)

(22)

(6)

(28)

Share in income of equity-accounted

   investees

 

87

 

(87)

 

-

 

7

 

(7)

 

-

 

56

 

(56)

 

-

 

9

 

(9)

 

-

Income before taxes on income

286

21

307

214

10

224

90

13

103

98

9

107

Taxes on income

(86)

(21)

(107)

(74)

(10)

(84)

(30)

(13)

(43)

(32)

(9)

(41)

Effective tax rate

30.2%


35.0%

34.6%


37.7%

33.9%


42.6%

32.8%


38.4%

Income for the period

200

-

200

140

-

140

60

-

60

66

-

66

Attributable to:

The Company's shareholders

 

151

 

-

 

151

 

98

 

-

 

98

 

43

 

-

 

43

 

41

 

-

 

41

Non-controlling interests

49

-

49

42

-

42

17

-

17

25

-

25

Income for the period

200

-

200

140

-

140

60

-

60

66

-

66

 

* Financial data were rounded off to NIS millions. The percentages change were calculated on the basis of the exact figures in NIS thousands.

 

-       Additional adjustments to the non-GAAP management reports (share-based payment, valuation of hedging transactions, other expenses and taxes referring to these adjustments)*:

 


First Half

Second Quarter


2013

2012

% Chg

2013

2012

% Chg

Operating profit – according to proportionate

   consolidation method – after other income

   (expenses)

 

 

369

 

 

292

 

 

26.8

 

 

139

 

 

135

 

 

3.4

Share-based payment  

10

9


5

5


Valuation of balance of commodity hedging

   transactions as at end of period

 

17

 

(16)


 

35

 

(14)


Other expenses (income)

3

8


6

(1)


Operating profit – non-GAAP management

   reports

 

399

 

293

 

36.3

 

185

 

125

 

48.0

Financing expenses, net

(62)

(68)


(36)

(28)


Taxes on income

(107)

(84)


(43)

(41)


Taxes in respect of adjustments to the above

   non-GAAP operating profit

 

4

 

1


 

(4)

 

2


Income for the period – non-GAAP

234

142

65.7

102

58

77.9

Attributable to:

The Company's shareholders

 

178

 

100

 

77.9

 

75

 

35

 

117.2

Non-controlling interests

56

42

35.9

27

23

18.1

 

* Financial data were rounded off to NIS millions. The percentages change were calculated on the basis of the exact figures in NIS thousands.

For further information:

Talia Sessler

Investor Relations Director

Strauss Group Ltd.

972-54-5772195

972-3-6752545

talia.sessler@strauss-group.com

 

Osnat Golan

VP Communications & Digital, Spokesperson

Strauss Group Ltd.

972-52-8288111

972-3-6752281

 

Gil Messing

External Communications Director

Strauss Group Ltd.

972-54-2525272

 

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