Strauss Group Announces Results For Third Quarter 2012

22 Nov 2012

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Strauss Group reports 3.1% sales growth and 26.1% non gaap operating profit growth thanks to strong results in the international coffee segment and in Sabra's operations in North America

22 Nov 2012 --- Ofra Strauss, Chairperson of Strauss Group, said: "The third quarter results reflect Strauss Group's capabilities in managing a diverse, international business portfolio. The company continues to invest in developing its international activities and strengthening growth drivers while persevering in streamlining processes, innovation, and providing significant added value to consumers in all markets where it is active, particularly in our home market in Israel."

Gadi Lesin, President and Chief Executive Officer of Strauss Group, said: "Strauss Group posted 26.1% growth in the non-GAAP operating profit in the third quarter of 2012 thanks to strong performance in the international coffee segment and in Sabra, where sales grew by 34.2% in the quarter. At the same time, the Group continues to contend with challenges in its home market in Israel and is implementing dozens of internal streamlining processes. Strauss Israel has refrained from raising the prices of its products, other than a small number of dairy product categories where a moderate increase was inevitable in line with the increase in the price of raw milk."

Key data on the third quarter and as at September 30, 2012:

- Sales totaled NIS 2.1 billion (NIS 2.0 billion last year), an increase of 3.1%; organic sales excluding the effect of changes in exchange rates grew by 4.4%.

- Gross profit totaled NIS 737 million (35.5% of sales) compared to NIS 688 million last year (34.2% of sales), an increase of 7.1%.

- Operating profit totaled NIS 175 million (8.4% of sales) compared to NIS 139 million last year(6.9% of sales), an increase of 26.1%.

- The non-GAAP operating profit in the third quarter was positively influenced by the increase in the non-GAAP operating profit of Strauss Coffee (an increase of NIS 27million, of which NIS 24 million originated in the international coffee segment), by the growth in Sabra's operating profit (an increase of NIS 14 million) and by a decrease in the operating loss of Obela (a positive contribution of NIS 3 million). However, the increase was offset by an increase in the operating loss of the "Other" segment (a negative contribution of NIS 4 million), mainly as a result of the growth in operating expenses related to building the activity of Strauss Water in China and England, a decrease in the Fun & Indulgence segment (a negative contribution of NIS 3 million), and a decrease in the results of operations of the Health & Wellness segment (a decrease of NIS 1 million).

- Net income attributed to the Company's shareholders in the third quarter totaled NIS 69 million (3.3% of sales) compared to NIS 61 million last year (3.0% of sales), an increase of 14.5%.

- Cash flows from operating activities totaled NIS 171 million compared to NIS 57 million in the corresponding quarter last year.

- The net debt as at September 30, 2012 totaled NIS 1,613 million (compared to NIS 1,463 million on December 31, 2011 and NIS 1,671 million on June 30, 2012).

Key data on the first nine months of the year1:

- Sales totaled NIS 6.1 billion (NIS 5.6 billion last year), an increase of 8.0%; organic sales excluding the effect of changes in exchange rates grew by 8.7%.

- Gross profit totaled NIS 2.1 billion (35.1% of sales) compared to NIS 2.0 billion last year (35.8% of sales), an increase of 5.8%.

- Operating profit totaled NIS 468 million (7.7% of sales) compared to NIS 418 million last year (7.4% of sales), an increase of 11.9%.

- The growth in the non-GAAP operating profit was mainly due to an improvement in the operating profit of Strauss Coffee (an increase of NIS 43 million), growth in the non-GAAP operating profit in Sabra (an increase of NIS 25 million) and a slight growth in the non-GAAP operating profit of the Fun & Indulgence segment (an increase of NIS 1 million). However, this growth was offset by a decrease in the results of the Health & Wellness segment (a decrease of NIS 8 million), an increase in the operating loss of the "Other" segment (a negative contribution of NIS 7 million), mainly as a result of the growth in operating expenses related to building the activity of Strauss Water in China and England, and expenses related to building the international dips and spreads business (Obela) outside of North America (a negative contribution of NIS 7 million).

- Net income attributed to the Company's shareholders totaled NIS 170 million (2.8% of sales) compared to NIS 170 million last year (3.0% of sales).

- Cash flows from operating activities totaled NIS 412 million compared to a negative cash flow of NIS 20 million in the corresponding period last year.