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Strauss Group Announces Results For First Quarter 2013


News provided by

Strauss Group Ltd

28 May, 2013, 06:33 GMT

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TEL AVIV, Israel, May 28, 2013 /PRNewswire/ --

 Posts Strong Operating Profit Due to Solid Performance by Strauss Coffee's International Operations

The Group's sales in the first quarter totaled NIS 2.0 billion and were impacted by the erosion of the average exchange rate of the Brazilian Real versus the Shekel;

The Group posted a record non-GAAP operating profit, which amounted to NIS 214 million

Gadi Lesin, President and Chief Executive Officer of the Strauss Group, commented, "Strauss's international activity continued to prove its strength in the quarter, expanding profit despite a significant negative impact from changes in relevant currency exchange rates. Our home market in Israel also maintained its positive performance. Overall, the Group posted strong operating results thanks mainly to the improvement in the international coffee business as well as the dips and spreads segment, and as a result of the continued implementation of streamlining processes across all of the Group's businesses. At the same time, we are continuing to invest in the Group's future growth drivers and in innovation in all areas of our activity. Our goal remains to continue to deliver real added value to consumers, while enhancing our strength as a leading Group."

Key data on the first quarter of 2013[1]

Commencing in the first quarter of 2013, the Strauss Group retroactively 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 have remained unchanged, the Group continues to present the activity segments in the identical manner in which they were presented in prior periods.

  • Sales totaled NIS 2.0 billion (compared with NIS 2.1 billion last year), a decrease of 2.5%; excluding the negative impact of changes in exchange rates, organic sales grew by 0.1% over the last year.
  • Non-GAAP gross profit totaled NIS 767 billion (38.1% of sales) compared to NIS 731 billion in the corresponding quarter last year (35.4% of sales), an increase of 4.9%.
  • Non-GAAP operating profit (EBIT) totaled NIS 214 million (10.6% of sales) compared to NIS 168 million in the corresponding quarter last year (8.1% of sales), an increase of 27.5%. The growth was primarily due to the significant growth in the profits of International Coffee and International Dips and Spreads.
  • Non-GAAP net income attributable to the Company's shareholders totaled NIS 103 million (5.1% of sales) compared to NIS 65 million in the corresponding quarter last year (3.2% of sales), an increase of 57.2%.
  • Cash flows from operating activities (GAAP) amounted to a negative cash flow of NIS 25 million compared to a negative cash flow of NIS 86 million in the corresponding quarter last year.
  • Net credit (GAAP) as at March 31, 2013 totaled NIS 1,306 million (compared to NIS 1,471 million on March 31, 2012 and NIS 1,199 million on December 31, 2012.

--------------------------------------------------

1. Based on non-GAAP data, which 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.


ANALYSIS OF FINANCIAL RESULTS

Following are the condensed financial accounting statements of income (GAAP) for the quarters ended March 31, 2013 and 2012 (in NIS millions)*:

                                                               First Quarter
                                                            2013    2012  % Chg
    Sales                                                  1,418   1,468   (3.4)
    Cost of sales excluding impact of hedging transactions   854     892   (4.2)
    Valuation of balance of commodity hedging
    transactions as at end of period                         (18)     (2)
    Cost of sales                                            836     890   (6.0)
    Gross profit                                             582     578    0.6
    % of sales                                              41.1%   39.4%
    Selling and marketing expenses                           319     335   (5.0)
    General and administrative expenses                       80      82   (2.6)
    Operating profit before other income (expenses)          183     161   14.0
    % of sales                                              12.9%   11.0%
    Other income (expenses), net                               3      (9)
    Operating profit after other income (expenses)           186     152   23.1
    Financing expenses, net                                  (21)    (34) (36.5)
    Share in income (losses) of equity-accounted investees    31      (2)
    Income before taxes on income                            196     116   70.5
    Taxes on income                                          (56)    (42)  34.4
    Effective tax rate                                      28.5%   36.1%
    Income for the period                                    140      74   90.9
    Attributable to:
    The Company's shareholders                               108      57   90.4
    Non-controlling interests                                 32      17   92.7

* 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 Quarter - 2013         First Quarter - 2012
                                                                Proportionate
                                                                consolidation
                                   Proportionate                  method (as
                                   consolidation                   reported
                                       method                   before IFRS 11
                     Equity         (applied to   Equity          had become
                     method Change     date)      method  Change   effective)
    Sales            1,418    595       2,013      1,468    597       2,065
    Cost of sales
    excluding impact
    of hedging
    transactions       854    392       1,246        892    442       1,334
    Valuation of
    balance of
    commodity
    hedging
    transactions as
    at end of period   (18)     -         (18)        (2)     -          (2)
    Cost of sales      836    392       1,228        890    442       1,332
    Gross profit       582    203         785        578    155         733
    % of sales        41.1%  (2.1%)      39.0%      39.4%  (3.9%)      35.5%
    Selling and
    marketing
    expenses           319    128         447        335    121         456
    General and
    administrative
    expenses            80     31         111         82     29         111
    Operating profit
    before other
    income
    (expenses)         183     44         227        161      5         166
    % of sales        12.9%  (1.7%)      11.3%      11.0%  (2.9%)       8.0%
    Other income
    (expenses), net      3      -           3         (9)     -          (9)
    Operating profit
    after other
    income
    (expenses)         186     44         230        152      5         157
    Financing
    expenses, net      (21)    (5)        (26)       (34)    (6)        (40)
    Share in income
    (losses) of
    equity-accounted
    investees           31    (31)          -         (2)     2           -
    Income before
    taxes on income    196      8         204        116      1         117
    Taxes on income    (56)    (8)        (64)       (42)    (1)        (43)
    Effective tax
    rate              28.5%   2.7%       31.2%      36.1%   1.0%       37.1%
    Income for the
    period             140      -         140         74      -          74
    Attributable to:

    The Company's
    shareholders       108      -         108         57      -          57
    Non-controlling
    interests           32      -          32         17      -          17
Additional adjustments to the non-GAAP management reports (share-based payment, valuation of hedging transactions, other expenses and taxes referring to these adjustments):
                                                          First Quarter
                                                      2013     2012   % Change
    Operating profit - according to proportionate
    consolidation method - after other income
    (expenses)                                         230      157      46.8
    Share-based payment                                  5        4
    Valuation of balance of commodity hedging
    transactions as at end of period                   (18)      (2)
    Other (income) expenses                             (3)       9
    Operating profit - non-GAAP                        214      168      27.5
    Financing expenses, net                            (26)     (40)
    Taxes on income                                    (64)     (43)
    Taxes in respect of adjustments to the above
    non-GAAP operating profit                            8       (1)
    Income for the period - non-GAAP                   132       84      57.4
    Attributable to:
    The Company's shareholders                         103       65      57.2
    Non-controlling interests                           29       19      57.8

Following are the condensed results of business operations (based on non-GAAP management reports) for the quarters ended March 31, 2013 and 2012 (in NIS millions):

                                                  First Quarter
                                              2013     2012   % Change
    Sales                                    2,013    2,065     (2.5)
    Cost of sales                            1,246    1,334     (6.6)
    Gross profit - non-GAAP                    767      731      4.9
    % of sales                                38.1%    35.4%
    Selling and marketing expenses             447      456     (1.8)
    General and administrative expenses        106      107     (1.8)
    Operating profit - non-GAAP                214      168     27.5
    % of sales                                10.6%     8.1%
    Financing expenses, net                    (26)     (40)   (34.3)
    Income before taxes on income              188      128     46.8
    Taxes on income                            (56)     (44)    26.7
    Effective tax rate                        29.9%    34.6%
    Income for the period - non-GAAP           132       84     57.4
    Attributable to:

    The Company's shareholders                 103       65     57.2
    Non-controlling interests                   29       19     57.8


Following are the condensed results of business operations (based on non-GAAP management reports) of the major business sectors for the quarters ended March 31, 2013 and 2012 (in NIS millions):

                                                  First Quarter
                                           2013       2012     % Change
    Israel
    Net sales                              756        772       (2.0)
    Operating profit                        94         92        2.4
    EBITDA                                 113        111        2.5
    Coffee
    Net sales                              989      1,048       (5.6)
    Operating profit                       111         77       44.7
    EBITDA                                 131         94       39.0
    International Dips and Spreads
    Net sales                              134        112       18.9
    Operating profit                         7          3      104.7
    EBITDA                                  12          8       47.9
    Other
    Net sales                              134        133        0.3
    Operating profit (loss)                  2         (4)    (132.1)
    EBITDA                                  14          8       72.3
    Total
    Net sales                            2,013      2,065       (2.5)
    Operating profit                       214        168       27.5
    EBITDA                                 270        221       22.3

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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