PR Newswire | Nov 16, 2021 01:14AM EST

Strauss Group announces a strong quarter with NIS 2.3 billion in revenue

11/16 00:13 CST

The international food and beverage group's sales rise 6.9%[1] in Q3 2021: Strauss Group announces a strong quarter with NIS 2.3 billion in revenueStrauss Group has maintained its growth momentum as Strauss Israel, Strauss Water and Strauss Coffee deliver solid revenue growth.The Group recorded NIS 52 million in profit from its FoodTech businessNet profit attributable to shareholders in the third quarter was NIS 204 million PETAH TIKVA, Israel, Nov. 16, 2021

PETAH TIKVA, Israel, Nov. 16, 2021 /PRNewswire/ -- This morning, the international food and beverage company Strauss Group (TASE: STRS) published its financial statements for the third quarter of 2021. The financial statements demonstrate that the Group has continued the growth momentum as in the past quarters, with revenues for the quarter amounting to NIS 2.3 billion, an increase of 6.9% compared to the corresponding period last year. Sales growth is evident in most of the company's operations: Strauss's activity in Israel, Strauss Water's business, and the worldwide operations of Strauss Coffee. Sales of the dips and spreads company Sabra in the US in the quarter were stable.

Strauss Group President & CEO, Giora Bardea "Strauss is making strides in its growth journey while coping with the ongoing effects of the COVID-19 pandemic on world economy. Among other things, these effects are expressed in global increases in commodity prices, worldwide shipping and handling costs and industrial energy prices. Group management is working to preserve resilience and stability, while making investments to ensure that the company is well-aligned and will maintain its growth momentum in the future. This is reflected in the growth delivered by the Group in its core businesses, along with initial returns on its strategic investment in innovation and in the FoodTech industry, which had a positive effect on the Group's profit in the quarter. ESG remains a core focus in our business and the Group is constantly improving its ESG scores. Together, these components will secure the Group's continuing resilience and growth in the future".

Despite the rise in revenues, the company reported stability in gross profit, which amounted to NIS 828 million, and a slight drop in operating profit (before inclusion of the profits of the FoodTech incubator), which amounted to NIS 248 million. Erosion of the gross and operating margins is largely the result of the increase in raw material prices, notably green coffee and milk, as well as rising global manufacturing and shipping costs as part of the fallout as the world emerges from the pandemic. Strauss reported a 20% increase in operating profit, which rose to NIS 300 million, and a 28.1% increase in net profit, which was NIS 204 million. This increase is due to a gain of NIS 52 million recorded by the company in its FoodTech business, which is largely the result of the impressive funding round closed by cultured meat developer, Aleph Farms. Furthermore, the incubator was recently joined by a new startup active in the manufacture of cultured fish products.

Strauss Israel continued to grow its business and market share and ended the quarter with a 2.4% sales growth, bringing sales to NIS 976 million. In the third quarter, the food industry in Israel recorded a drop of 3.6%, meaning that Strauss increased its market share by 0.4 percentage points to 12.3% according to StoreNext. During the quarter, the company launched the ready-to-heat frozen meals category (under the "Delicious" brand), the oat-based "Not Milk" drink, delivering innovation in the plant-based milk category, and the XXTRA Flamin' Hot Doritos and Cheetos snack food series. The company improved its operating margin due to sales growth and operating cost savings. Sales growth largely originated in the dairy and dairy alternative product category as well as the salty snack category. The salads category remained stable, whereas confectionery sales dropped compared to the corresponding period last year, among other things due to the timing of the Jewish high holidays, which this year fell entirely in September.

In the third quarter, Strauss Coffee's business was marked by rising world green coffee prices, which increased at higher rates compared to the corresponding period, among other things due to freak frost that damaged coffee plantations in various Brazilian states. Following the increase in the cost of green coffee, retail coffee prices were revised in Brazil (Trs Coraoes (JV)). The company in Brazil also delivered growth in quantities sold, and in total, reported a 37.1% sales growth in local currency. However, the joint venture's gross and operating margins eroded. In Israel, the coffee business experienced a slight drop of 1.7% in sales due to the timing of the holidays in September. During the quarter, the coffee company launched its new aluminum capsules as well as the new Turkish Coffee "Tastes of the Market" limited edition offering - Galilee and Jerusalem - containing exotic blends of spices and herbs. The coffee business in Eastern Europe was marked by stability, with a slight drop in sales in Russia and Ukraine. In the third quarter and in the months of October and November, prices were raised in Ukraine, Romania, Serbia and Poland.

Strauss Water continued to grow with sales rising by 4.9% to approximately NIS 192 million. The company, which in the past quarter launched its new tami4edge water bar, has reported growth in both the number of customers and in the number of new appliances sold. The water business in China (Haier Strauss Water (HSW)), where the fight against COVID-19 continues, grew 8.9% in the third quarter.

Sabra, which has experienced challenges posed by the effects of the pandemic, reported a slight recovery in sales and moderate growth of 1.3% in the third quarter in local currency, with sales increasing to USD 97 million along with market share growth compared to the corresponding period last year. However, the company reported that its operating profit declined by 26% as a result of rising raw material prices, manufacturing and shipping costs.

Non GAAP Figures ^(1)

Third Quarter

2021 2020 Change

Total Group Sales (NIS mm) 2,297 2,174 5.7%

Organic Sales Growth excluding FX 6.9% 3.9%

Gross Profit (NIS mm) 828 824 0.4%

Gross Margins (%) 36.0% 37.9% -190 bps

EBITDA (NIS mm) 389 339 14.5%

EBITDA Margins (%) 16.9% 15.6% +130 bps

EBIT (NIS mm) 300 250 20.0%

EBIT Margins (%) 13.1% 11.5% +160 bps

Net Income Attributable to the Company's 204 158 28.1%Shareholders (NIS mm)

Net Income Margin (Attributable to 8.9% 7.3% +160 bpsthe Company's Shareholders) (%)

EPS (NIS) 1.75 1.37 27.9%

Operating Cash Flow (NIS mm) 304 183* 66.0%

Capex (NIS mm) ^(2) 72 73 -1.4%

Net debt (NIS mm) 1,926 1,993 -3.4%

Net debt / annual EBITDA 1.4x 1.6x (0.2x)

* Restated.

^(1) The data in this document are based on the company's non-GAAP figures,which include the proportionate consolidation of jointly controlled businessesand do not include share-based payment, mark-to-market at end-of-period of openpositions in the Group in respect of financial derivatives used to hedgecommodity prices and all adjustments necessary to delay recognition of gainsand losses arising from commodity derivatives until the date when the inventoryis sold to outside parties, other income and expenses, net, and the tax effectof excluding those items, unless stated otherwise.

^(2) Investments include the acquisition of fixed assets, investment inintangible assets and proceeds from the sale of fixed assets

Note: Financial data were rounded to NIS millions. Percentages changes werecalculated on the basis of the exact figures in NIS thousands

Financial data were rounded to NIS millions.

Non GAAP Figures ^(1)

Third Quarter

Sales Organic NIS Change in Sales Growth Sales EBIT Change % Change EBIT EBIT (NIS vs. Last Growth (NIS in in EBIT margins margins mm) Year excluding mm) EBIT vs. 2020 FX

Sales and EBIT by Operating Segmentsand Activities



StraussIsrael:

Health & 705 4.3% 4.3% 97 11 11.6% 13.6% +90 bpsWellness

Fun &Indulgence ^ 271 -2.5% -2.5% 16 -4 -15.4% 6.3% -90 bps(2)

Total Strauss 976 2.4% 2.4% 113 7 6.5% 11.6% +50 bpsIsrael

StraussCoffee:

Israel Coffee 173 -1.7% -1.7% 35 -5 -13.3% 19.8% -270 bps

International 780 15.4% 18.1% 61 -2 -1.8% 8.0% -140 bpsCoffee ^(2)

Total Strauss 953 11.9% 13.9% 96 -7 -6.5% 10.1% -200 bpsCoffee

International Dips& Spreads:

Sabra (50%) ^ 156 -4.3% 1.3% 13 -5 -29.9% 8.5% -300 bps(2)

Obela (50%) ^ 20 -10.7% -8.3% - 1 89.9% NM NM(2)

TotalInternational 176 -4.9% 0.1% 13 -4 -23.8% 7.4% -180 bpsDips &Spreads

Strauss Water 192 4.9% 4.8% 26 1 1.5% 13.2% -50 bps^(2)

Other - NM NM 52 53 7,332.0% NM NM

Total Group 2,297 5.7% 6.9% 300 50 20.0% 13.1% +160 bps

(1) The data in this document are based on the company's non-GAAP figures,which include the proportionate consolidation of jointly controlled businessesand do not include share-based payment, mark-to-market at end-of-period of openpositions in the Group in respect of financial derivatives used to hedgecommodity prices and all adjustments necessary to delay recognition of gainsand losses arising from commodity derivatives until the date when the inventoryis sold to outside parties, other income and expenses, net, and the tax effectof excluding those items, unless stated otherwise.

(2) Fun & Indulgence figures include Strauss's 50% share in the salty snacksbusiness. International Coffee figures include Strauss's 50% share in the Tr?sCora??es joint venture (3C) - Brazil - a company jointly held by the Group(50%) and by the local S?o Miguel Group (50%). International Dips & Spreadsfigures reflect Strauss's 50% share in Sabra and Obela. Strauss Water EBITfigures include Strauss's share in Haier Strauss Water (HSW) in China (49%).

Note: Financial data were rounded to NIS millions. Percentages changes werecalculated on the basis of the exact figures in NIS thousands. Total figuresfor International Dips & Spreads were calculated on the basis of the exactfigures for Sabra and Obela in NIS thousands.

Non GAAP Figures ^(1)

First Nine Months

2021 2020 Change

Total Group Sales (NIS mm) 6,490 6,280 3.3%

Organic Sales Growth excluding FX 5.6% 4.5%

Gross Profit (NIS mm) 2,435 2,445 -0.4%

Gross Margins (%) 37.5% 38.9% -140 bps

EBITDA (NIS mm) 1,058 1,002 5.5%

EBITDA Margins (%) 16.3% 16.0% +30 bps

EBIT (NIS mm) 801 741 8.0%

EBIT Margins (%) 12.3% 11.8% +50 bps

Net Income Attributable to the Company's Shareholders 536 464 15.4%(NIS mm)

Net Income Margin (Attributable to the Company's 8.3% 7.4% +90 bpsShareholders) (%)

EPS (NIS) 4.61 4.01 15.1%

Operating Cash Flow (NIS mm) 612 581* 5.3%

Capex (NIS mm) ^(2) 199 206 -3.4%

Net debt (NIS mm) 1,926 1,993 -3.4%

Net debt / annual EBITDA 1.4x 1.6x (0.2x)

* Restated.

^(1) The data in this document are based on the company's non-GAAP figures,which include the proportionate consolidation of jointly controlled businessesand do not include share-based payment, mark-to-market at end-of-period of openpositions in the Group in respect of financial derivatives used to hedgecommodity prices and all adjustments necessary to delay recognition of gainsand losses arising from commodity derivatives until the date when the inventoryis sold to outside parties, other income and expenses, net, and the tax effectof excluding those items, unless stated otherwise.

^(2) Investments include the acquisition of fixed assets, investment inintangible assets and proceeds from the sale of fixed assets.

Note: Financial data were rounded to NIS millions. Percentages changes werecalculated on the basis of the exact figures in NIS thousands

Non GAAP Figures (1)

First Nine Months

Sales Organic NIS Change in Sales Growth Sales EBIT Change % EBIT EBIT (NIS vs. Last Growth (NIS in Change margins margins mm) Year excluding mm) EBIT in EBIT vs. 2020 FX

Sales and EBIT by Operating Segments andActivities

StraussIsrael:

Health & 2,008 5.1% 5.1% 261 26 10.5% 12.9% +60 bpsWellness

Fun &Indulgence ^ 859 -2.0% -2.0% 89 -4 -3.6% 10.4% -20 bps(2)

Total Strauss 2,867 2.9% 2.9% 350 22 6.5% 12.2% +40 bpsIsrael

StraussCoffee:

Israel Coffee 545 0.3% 0.3% 120 -6 -4.7% 22.0% -110 bps

International 2,007 5.5% 11.9% 152 -5 -2.7% 7.6% -70 bpsCoffee ^(2)

Total Strauss 2,552 4.4% 9.2% 272 -11 -3.7% 10.7% -90 bpsCoffee

International Dips& Spreads:

Sabra (50%) ^ 460 -8.0% -1.7% 42 -17 -29.6% 9.0% -280 bps(2)

Obela (50%) ^ 63 4.3% 0.7% -5 - 8.2% NM NM(2)

TotalInternational 523 -6.7% -1.4% 37 -17 -31.7% 7.0% -260 bpsDips &Spreads

Strauss Water 548 12.6% 12.3% 70 0 -1.1% 12.7% -180 bps^(2)

Other - NM NM 72 66 1046.2% NM NM

Total Group 6,490 3.3% 5.6% 801 60 8.0% 12.3% +50 bps

^(1) The data in this document are based on the company's non-GAAP figures,which include the proportionate consolidation of jointly controlled businessesand do not include share-based payment, mark-to-market at end-of-period of openpositions in the Group in respect of financial derivatives used to hedgecommodity prices and all adjustments necessary to delay recognition of gainsand losses arising from commodity derivatives until the date when the inventoryis sold to outside parties, other income and expenses, net, and the tax effectof excluding those items, unless stated otherwise.

^(2) Fun & Indulgence figures include Strauss's 50% share in the salty snacksbusiness. International Coffee figures include Strauss's 50% share in the Tr?sCora??es joint venture (3C) - Brazil - a company jointly held by the Group(50%) and by the local S?o Miguel Group (50%). International Dips & Spreadsfigures reflect Strauss's 50% share in Sabra and Obela. Strauss Water EBITfigures include Strauss's share in Haier Strauss Water (HSW) in China (49%).

Note: Financial data were rounded to NIS millions. Percentages changes werecalculated on the basis of the exact figures in NIS thousands. Total figuresfor International Dips & Spreads were calculated on the basis of the exactfigures for Sabra and Obela in NIS thousands.

Condensed financial accounting (GAAP)

Third Quarter

2021 2020 Change

Sales 1,546 1,541 0.3%

Cost of sales excluding impact of commodity hedges 933 932 0.2%

Adjustments for commodity hedges 10 -19

Cost of sales 943 913 3.3%

Gross profit 603 628 -3.9%

% of sales 39.0% 40.7%

Selling and marketing expenses 332 336 -1.2%

General and administrative expenses 106 97 8.9%

Total expenses 438 433 1.0%

Share of profit of equity-accounted investees 62 *66 -7.6%

Share of profit (loss) of equity-accounted incubator 52 *-2 2,127.2%investees

Operating profit before other expenses 279 259 7.7%

% of sales 18.1% 16.8%

Other expenses, net -3 -

Operating profit after other expenses 276 259 6.8%

Financing expenses, net -25 -25 0.2%

Income before taxes on income 251 234 7.5%

Taxes on income -42 -48 -12.0%

Effective tax rate 16.8% 20.5%

Income for the period 209 186 12.5%

Attributable to the Company's shareholders 189 168 12.6%

Attributable to non-controlling interests 20 18 11.8%

Condensed financial accounting (GAAP)

First Nine Months

2021 2020 Change

Sales 4,513 4,419 2.1%

Cost of sales excluding impact of commodity hedges 2,686 2,623 2.4%

Adjustments for commodity hedges -1 -1

Cost of sales 2,685 2,622 2.4%

Gross profit 1,828 1,797 1.8%

% of sales 40.5% 40.7%

Selling and marketing expenses 981 972 1.0%

General and administrative expenses 313 301 3.9%

Total expenses 1,294 1,273 1.7%

Share of profit of equity-accounted investees 150 *189 -20.9%

Share of profit (loss) of equity-accounted incubator 75 *-7 1,208.4%investees

Operating profit before other expenses 759 706 7.5%

% of sales 16.8% 16.0%

Other expenses, net - -

Operating profit after other expenses 759 706 7.6%

Financing expenses, net -47 -82 -43.0%

Income before taxes on income 712 624 14.2%

Taxes on income -134 -121 10.8%

Effective tax rate 18.8% 19.4%

Income for the period 578 503 15.0%

Attributable to the Company's shareholders 522 450 16.2%

Attributable to non-controlling interests 56 53 5.1%

* Reclassified

Financial data were rounded to NIS millions. Percentages changes werecalculated on the basis of the exact figures in NIS thousands.

Conference Call

Strauss Group will host a Zoom conference call in Hebrew on Tuesday, November 16, 2021 at 14:00 (Israel time) with the participation of company management to review the financial statements of the company for the third quarter of 2021. Following is information for those wishing to join the conference:

Meeting https://straussgroup.zoom.us/j/98971616758?pwd=URL: TFNIK2JwZHF5azg3M2ZPRDA0R3Uxdz09

Meeting 989 7161 6758ID:

Password: 444140

Strauss Group will also host a Zoom conference call in English on Tuesday, November 16, 2021 at 15:30 (Israel time) (13:30 UK, 08:30 EST) with the participation of company management to review the financial statements of the company for the third quarter of 2021.

Meeting https://straussgroup.zoom.us/j/98896664839?pwd=URL: eVhFRkZqb040cXZjNU9nSmhWOU92Zz09

Meeting 988 9666 4839ID:

Password: 588327

A recording of the calls will subsequently be available on the company's website at: https://ir.strauss-group.com/company-presentations/conference-call-recordings/

The financial statements of the company for the third quarter of 2021 and the presentation that will accompany the conferences will be available prior to the conference calls on the following websites: https://ir.strauss-group.com/company-presentations/quarterly-presentations/https://ir.strauss-group.com/earning-releases/

For further information, please contact

Osnat Golan Daniella Finn

VP Communications, Corporate Brand & Director of Investor RelationsSustainability Strauss Group Ltd.Strauss Group Ltd. 972-54-577-2195972-52-828-8111 972-3-675-2545972-3-675-2281 Daniella.Finn@Strauss-Group.comOsnat.Golan@Strauss-Group.com

Or

Shlomi Sheffer

External Communications Director

Strauss Group Ltd.

972-50-620-8000

972-3-675-6713 Shlomi.Sheffer@Strauss-Group.com

[1] Organic growth excluding foreign currency effects.

The data in this document are based on the company's non-GAAP figures, which include the proportionate consolidation of jointly controlled businesses and do not include share-based payment, mark-to-market at end-of-period of open positions in the Group in respect of financial derivatives used to hedge commodity prices and all adjustments necessary to delay recognition of gains and losses arising from commodity derivatives until the date when the inventory is sold to outside parties, other income and expenses, net, and the tax effect of excluding those items, unless stated otherwise.

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SOURCE Strauss Group Ltd.