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Strauss Group concluded the first half of 2014 with approximately 3.3% organic growth (excluding the foreign currency effect)

-- Thanks to an improvement in the results of our international growth drivers, in the second quarter the gross profit grew by 2.7%, and the currency effect on sales was estimated at approximately NIS 95 million

-- Taking a multi-year perspective, the Group's Profitability for the half and quarter have continued its trend of improvement

PETACH TIKVA, Israel, Aug. 20, 2014 /PRNewswire/ -- Gadi Lesin, President and Chief Executive Officer of Strauss Group, said today (August 19, 2014): "Strauss posted stable growth excluding the FX effect. The Group is contending with economic challenges in Eastern European markets, notably Russian and Ukraine, while posting continued growth in the international dips and spreads operation and in Strauss Water."

H1 2014 highlights (1)

  • Although lower than 2013, which was a record year, taking a multi-year perspective the Company's business results have continued their growth trend.
  • Organic sales growth, excluding the impact of foreign exchange, was 3.3%. Sales amounted to NIS 3.9 billion, a decrease of 2.7%, reflecting by NIS 228 million negative translation differences as a result of the continued strengthening of the NIS versus other functional currencies of the Group.
  • Gross profit amounted to NIS 1,558 million (39.7% of sales), an increase of 2.7% compared to the corresponding period last year. Gross margins were up 2.0%.
  • Operating profit (EBIT) amounted to NIS 376 million (9.6% of sales), a decrease of 5.5% compared to the corresponding period last year. EBIT margins were down 0.3%.
  • Earnings per share amounted to NIS 1.57, a decrease of 6.0% compared to the corresponding period last year.
  • Cash flows from operating activities amounted to NIS 128 million, compared to NIS 240 million in the corresponding period.
  • Net debt as at June 30, 2014 amounted to NIS 1,720 million, compared to NIS 1,403 million on June 30, 2013 and NIS 1,475 million on December 31, 2013.

(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.

 

Non GAAP Adjusted Figures (2)







First Half


2014

2013

Change

Organic
Growth
excluding FX

Total Group Sales (NIS mm)

3,922

4,029

-2.7%

3.3%

Gross Profit (NIS mm)

1,558

1,518

2.7%


Gross Margins (%)

39.7%

37.7%

+200 bps


EBITDA (NIS mm)

485

509

-4.9%


EBITDA Margins (%)

12.4%

12.7%

 -30 bps


EBIT (NIS mm)

376

399

-5.5%


EBIT Margins (%)

9.6%

9.9%

 -30 bps


Net Income Attributable to the
Company's Shareholders (NIS mm)

168

178

-5.6%


Net Income Margin Attributable to
the Company's Shareholders (%)

4.3%

4.4%

 -10 bps


EPS (NIS)

1.57

1.67

-6.0%


Operating Cash Flow (NIS mm)

128

240



Capex (NIS mm) (3)

(257)

(201)

27.9%


Net debt (NIS mm)

1,720

1,403

22.6%


Net debt / annual EBITDA

1.7x

1.6x

0.1x


 

(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)

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.

 

Non GAAP Adjusted Figures (4)











First Half


Sales
(NIS mm)

Sales Growth
vs. Last Year

Organic Sales
Growth excluding
FX

EBIT (NIS mm)

NIS
Change in
EBIT

% Change
in EBIT 

EBIT
margins

Change in EBIT
margins vs. 2013

Sales and EBIT by Operating
Segments and Activities









Strauss Israel:









          Health & Wellness

979

2.2%

2.2%

100

14

15.5%

10.1%

+110 bps

          Fun & Indulgence (5)

524

-0.1%

-0.1%

66

(10)

-12.2%

12.6%

 -180 bps

     Total Strauss Israel

1,503

1.4%

1.4%

166

4

2.5%

11.0%

+10 bps










Strauss Coffee:









          Coffee Israel 

356

-1.7%

-1.7%

54

0

-1.3%

15.0%

--

          International Coffee (5)

1,418

-12.4%

0.9%

125

(31)

-19.1%

8.9%

 -70 bps

     Total Strauss Coffee

1,774

-10.4%

0.1%

179

(31)

-14.5%

10.1%

 -50 bps










International Dips & Spreads:









          Sabra (50%) (5)

304

9.9%

15.7%

42

8

24.2%

13.8%

+160 bps

          Obela (50%) (5)

16

-1.4%

15.4%

(10)

(1)

6.8%

NM

NM

     Total International Dips & 
     Spreads

320

9.3%

15.7%

32

8

30.9%

10.0%

+160 bps










     Other (5)

325

19.0%

22.1%

(1)

(4)

-122.8%

-0.2%

 -120 bps

Total Group

3,922

-2.7%

3.3%

376

(23)

-5.5%

9.6%

 -30 bps

 

(4)

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.



(5)

Fun & Indulgence figures include Strauss 50% share in the salty snacks business. International Coffee figures include Strauss 50% share in Tres Coracoes (3C) – a company jointly held by the Group (50%) and by a local Sao 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 2014 highlights (1)

  • Although lower than 2013, which was a record year, taking a multi-year perspective the Company's business results have continued their growth trend.
  • Organic sales growth, excluding the impact of foreign exchange, was 1.7%. Sales amounted to NIS 1.9 billion, a decrease of 3.3%, reflecting by NIS 95 million negative translation differences as a result of the continued strengthening of the NIS versus other functional currencies of the Group.
  • Gross profit amounted to NIS 768 million (39.4% of sales), an increase of 2.3% compared to the corresponding period last year. Gross margins were up 2.2%.
  • Operating profit (EBIT) amounted to NIS 172 million (8.9% of sales), a decrease of 6.3% compared to the corresponding period last year. EBIT margins were down 0.2%.
  • Earnings per share amounted to NIS 0.64, a decrease of 8.8% compared to the corresponding period last year.
  • Cash flows from operating activities amounted to NIS 113 million, compared to NIS 240 million in the corresponding period.

(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.

 

Non GAAP Adjusted Figures (2)







Second Quarter


2014

2013

Change

Organic
Growth
excluding FX

Total Group Sales (NIS mm)

1,949

2,016

-3.3%

1.7%

Gross Profit (NIS mm)

768

751

2.3%


Gross Margins (%)

39.4%

37.2%

+220 bps


EBITDA (NIS mm)

227

239

-5.4%


EBITDA Margins (%)

11.6%

11.9%

 -30 bps


EBIT (NIS mm)

172

185

-6.3%


EBIT Margins (%)

8.9%

9.1%

 -20 bps


Net Income Attributable to the Company's Shareholders (NIS mm)

69

75

-8.7%


Net Income Margin (Attributable to the Company's Shareholders) (%)

3.5%

3.7%

 -20 bps


EPS (NIS)

0.64

0.70

-8.8%


Operating Cash Flow (NIS mm)

113

240

-52.9%


Capex (NIS mm) (3)

(125)

(109)

14.7%


Net debt (NIS mm)

1,720

1,403

22.6%


Net debt / annual EBITDA

1.7x

1.6x

0.1x


 

(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)

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.

 

Non GAAP Adjusted Figures (4)











Second Quarter


Sales
(NIS mm)

Sales Growth
vs. Last Year

Organic Sales
Growth
excluding FX

EBIT (NIS mm)

NIS Change in EBIT

% Change
in EBIT 

EBIT
margins

Change in EBIT
margins vs.
2013

Sales and EBIT by Operating
Segments and Activities









Strauss Israel:









          Health & Wellness

500

-0.7%

-0.7%

51

4

7.0%

10.1%

+70 bps

          Fun & Indulgence (5)

213

-4.2%

-4.2%

17

(4)

-15.5%

8.0%

 -100 bps

     Total Strauss Israel

713

-1.8%

-1.8%

68

0

0.2%

9.5%

+20 bps










Strauss Coffee:









          Israel Coffee 

151

-2.8%

-2.8%

13

(3)

-19.1%

8.4%

 -170 bps

          International Coffee (5)

757

-9.6%

1.1%

76

(7)

-7.2%

10.1%

+20 bps

     Total Strauss Coffee

908

-8.5%

0.2%

89

(10)

-9.1%

9.8%

 -10 bps










International Dips & Spreads:









          Sabra (50%) (5)

162

6.1%

11.1%

23

1

3.1%

14.3%

 -40 bps

          Obela (50%) (5)

9

27.6%

41.9%

(5)

--

-7.5%

NM

NM

     Total International Dips & 
     Spreads

170

7.0%

12.3%

18

1

1.9%

10.5%

 -50 bps










     Other (5)

158

13.7%

17.8%

(3)

(4)

260.7%

NM

NM

Total Group

1,949

-3.3%

1.7%

172

(13)

-6.3%

8.9%

 -20 bps

 

(4)

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.



(5)

Fun & Indulgence figures include Strauss 50% share in the salty snacks business. International Coffee figures include Strauss 50% share in Tres Coracoes (3C) – a company jointly held by the Group (50%) and by a local Sao 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

 

Reconciliations of GAAP to Non GAAP Adjusted Figures

First Half


2014

2013

GAAP sales

2,636

2,752

Add back JV sales (accounted for under the equity method)

1,286

1,277

Non GAAP sales

3,922

4,029




GAAP EBIT

334

336

Minus: Share in income of equity-accounted investees

(104)

(87)

Plus: JV EBIT (accounted for under the equity method)

126

120

Additional adjustments:



Non cash equity based compensation 

10

10

Loss (Profit) from accounting mark-to-market of commodity hedging transactions as at the end of period

(9)

17

Other expenses

19

3

Non GAAP Adjusted EBIT according to management reports

376

399




Non GAAP financing expenses, net (including JVs)

(56)

(62)

Non GAAP taxes on income (including JVs)

(106)

(107)

Taxes on income in respect of the additional adjustments above

7

4

Non GAAP income for the period

221

234

Attributable to the Company's shareholders

168

178

Non controlling interests

53

56







Reconciliations of GAAP to Non GAAP Adjusted Figures

Second Quarter


2014

2013

GAAP sales

1,266

1,334

Add back JV sales (accounted for under the equity method)

683

682

Non GAAP sales

1,949

2,016




GAAP EBIT

121

119

     Minus: Share in income of equity-accounted investees

(48)

(56)

Plus: JV EBIT (accounted for under the equity method)

57

76

Additional adjustments:



Non cash equity based compensation 

6

5

Loss from accounting mark-to-market of commodity hedging transactions as at the end of period

29

35

Other expenses 

7

6

Non GAAP Adjusted EBIT according to management reports

172

185




Non GAAP financing expenses, net (including JVs)

(38)

(36)

Non GAAP taxes on income (including JVs)

(41)

(43)

Taxes on income in respect of the additional adjustments above

3

(4)

Non GAAP income for the period

96

102

Attributable to the Company's shareholders

69

75

Non controlling interests

27

27

 

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