Retail

Israel's Strauss Group Sees Drop In Operating Profit Despite Revenue Growth In Q3

By Dayeeta Das
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Israeli food producer Strauss Group has reported 7% year-on-year growth in revenue to NIS 2.5 billion (€700 million) in the third quarter of its financial year.

However, the company registered a 9.9% drop in gross profit in this period, to NIS 746 million (€208 million), while operating profit was down 63.3% to 111 million (€31 million) compared to the same quarter in 2021.

In the first nine months of 2022, the company's revenue increased by 7.6% to NIS 7 billion (€1.95 billion).

The company attributed its good performance to sales growth in its coffee unit in Brazil and Eastern Europe, as well as continued growth in its water division.

It was however impacted by a drop in sales in its confectionery business and Sabra, both of which operated partially in the past several months.

Giora Bardea, Strauss Group CEO, explained, "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."

The company has named Shai Babad as its new chief executive officer, effective 1 December 2022.

Divisional Performance

Strauss Israel reported a 10.7% revenue decline, to NIS 871 million (€242.9 million), affected by a 47% drop in sales in the Fun & Indulgence segment during the quarter due to the confectionery recall.

In the first nine months of 2022, the company reported market share growth in the dairy, fresh foods, salty snacks and Yad Mordechai categories.

Sales in the Health & Wellness segment were up 3.2% in the third quarter to NIS 728 million (€203 million), driven by growth demand for dairy products and dairy alternatives.

However, rising raw material prices, particularly the 'target price' of milk, eroded the segment's operating profit.

Elsewhere, Strauss Coffee generated NIS 1.3 billion (€360 million) in revenue in the third quarter and saw 37.3% growth across all geographies.

In Europe, the coffee business saw a strong quarter, with sales growth of 67% in Russia and Ukraine and 23.5% in Poland.

Sabra generated sales worth NIS 82 million (€22.9 million) in the third quarter, down 47.6% year-on-year, with an operating loss of NIS 36 million (€10 million).

The business, whose activity was largely suspended in the first half of 2022, has resumed full-scale manufacturing operations and recently regained a 34.8% share of the hummus market in the USA.

Strauss Water reported sales worth NIS 210 million (€58.6 million) during the quarter, or an increase of 9.1% compared to the same period last year.

© 2022 European Supermarket Magazine – your source for the latest retail news. Article by Dayeeta Das. Click subscribe to sign up to ESM: European Supermarket Magazine.

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