Strauss Group Reports Results for the Third Quarter and First Nine Months of 2023: Quarterly revenues were up c7% to NIS 2.7 billion, with operating profit totaling NIS 212 million and net profit rising to NIS 120 million

Strauss delivered growth across most of the Group’s segments – in Israel, China, the US and Brazil

Strauss Group CEO Shai Babad: “Since the beginning of the war in Israel we have maintained business continuity. Our dedicated people are working across the country to keep on providing food and beverages and ensuring the food security of the residents of Israel. We have set up a dedicated fund for the farmers of the Gaza envelope, communities around the Gaza strip, and are also donating and helping the families that were evacuated as well as our soldiers and reservists. Our heart goes out to the families of the murdered and abducted, and we wish the wounded a speedy recovery.

“The quarterly results reflect our ongoing focus on implementing the Group’s strategy, productivity measures and innovation.”

PETAH TIKVA, Israel, Nov. 30, 2023 /PRNewswire/ — This morning, Strauss Group (TASE: STRS) published its financial statements for the third quarter and first nine months of 2023, summing up the quarter with NIS 2,675 million in revenue and cumulative revenue of NIS 7,854 million since the beginning of the year. Strauss sales grew 7.3% compared to the corresponding quarter and 11.5% in the first nine months compared to the corresponding period last year, as the growth trend in the Group’s business in Israel, China, Brazil and the US continues.

Results	Q3 2023	Q3 2022	First 9 months 2023	First 9 months 2022
Sales	NIS 2,675M	NIS 2,493M	NIS 7,854M	NIS 7,041M
% change	+7.3 %		+11.5 %
Operating profit	NIS 212M	NIS 111M	NIS 591M	NIS 315M
% change	+93.2 %		+ 87.6 %
% of sales	8.0 %	4.4 %	7.5 %	4.5 %
Net profit	NIS 120M	NIS 35M	NIS 339M	NIS 148M
% change	+236.7 %		+128.9 %

Gross profit in the third quarter was NIS 855 million (32% of sales), and operating profit was NIS 212 million (8% of sales). Since the beginning of the year, Strauss delivered gross profit of NIS 2,531 million (32.2% of sales) and operating profit of NIS 591 million (7.5% of sales). Net income attributable to shareholders in the quarter was NIS 120 million, and in the nine months – NIS 339 million.

Segments:

Strauss Israel

Strauss Israel delivered revenues of NIS 1,048 million in the third quarter, up 20% compared to the corresponding period last year. Strauss Israel’s operating profit was NIS 93 million. Health & Wellness sales were NIS 804 million, up 10%, and operating profit was NIS 101 million, reflecting 53% growth compared to the same quarter last year.

According to StoreNext figures, in the third quarter Strauss’s share of the total food and beverage market was in Israel 12.0%, compared to a market share of 10.5% in the corresponding period.

The Fun & Indulgence segment’s revenues in the third quarter rose by 70% compared to the corresponding period last year, amounting to NIS 244 million. Despite the increase, the Company recorded an operating loss of NIS 8 million following high operating expenses along with the gradual return to market, rising raw material prices, notably sugar and cocoa, and the weakening of the shekel. In the third quarter, the confectionery market share was 24.5%[1], a slight increase over the prior quarter.

Strauss Coffee

Strauss Coffee posted revenues of NIS 1,278 million in the third quarter, reflecting a slight drop of 2% versus the same quarter last year, among other things as a result of the decline in the coffee company in Russia. Strauss Coffee ended the third quarter with operating profit of NIS 90 million, down 37% compared to last year, the result of exchange rates, green coffee prices and the effects of the war in Russia last year.

In Israel, the coffee company’s revenues in the third quarter were NIS 210 million, up 5% compared to the corresponding period last year. Operating profit was NIS 30 million, an increase of 29% versus last year.

The international coffee business outside Israel delivered NIS 1,068 million in revenue in the third quarter, down 3.6%, and operating profit was NIS 60 million, a decline of 50% compared to the corresponding period. The coffee operation in Brazil delivered revenues of NIS 713 in the quarter, up 2% over last year, and most of the businesses in Eastern Europe also delivered growth.

Três Corações’s average value market share of the Brazilian roast & ground (R&G) coffee market in the first nine months of 2023 was 33.7%, compared to 32.5% in the corresponding period last year.

Strauss Water

Strauss Water continued to grow in the third quarter as revenues reached an all-time record high of NIS 221 million, up 5% versus NIS 210 million in the corresponding period last year. Operating profit in the quarter was NIS 21 million, down 17% compared to last year, the result of the effects of inflation and exchange rates, among others. The water business in China delivered solid results with revenues of NIS 200 million in the third quarter (for 100% ownership), up 22%, and NIS 19 million in net profit (100% ownership), up 22% compared to the same quarter last year.

International Dips & Spreads

The International Dips & Spreads segment continued to recover gradually as market shares in the US improved and revenues maintained their growth trend. Sales in the third quarter were NIS 127 million (for 50% ownership), up 23% versus last year, and operating profit was NIS 32 million due to a one-time insurance refund, compared to an operating loss of NIS 37 million in the corresponding period last year.

Non GAAP Figures ⁽¹⁾

	Third Quarter
	2023	2022	Change
Total Group Sales (NIS mm)	2,675	2,493	7.3 %
Organic Sales Growth excluding FX	2.8 %	7.0 %
Gross Profit (NIS mm)	855	746	14.7 %
Gross Margins (%)	32.0 %	29.9 %	+210 bps
EBITDA (NIS mm)	320	211	52.6 %
EBITDA Margins (%)	12.0 %	8.4 %	+360 bps
EBIT (NIS mm)	212	111	93.2 %
EBIT Margins (%)	8.0 %	4.4 %	+360 bps
Net Income Attributable to the Company’s Shareholders (NIS mm)	120	35	236.7 %
Net Income Margin (Attributable to the Company’s Shareholders) (%)	4.5 %	1.4 %	+310 bps
EPS (NIS)	1.04	0.31	236.4 %
Operating Cash Flow (NIS mm)	300	75	294.9 %
Capex (NIS mm) ⁽²⁾	147	111	32.4 %
Net debt (NIS mm)	2,880	2,517	14.4 %
Net debt / annual EBITDA	2.7x	3.0x	(0.3x)
(1) 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. (2) Investments include the acquisition of fixed assets, investment in intangible assets and proceeds from the sale of fixed assets. Note: Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands.

Non GAAP Figures ⁽¹⁾

	Third 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. 2022
Sales and EBIT by Operating Segments and Activities
Strauss Israel:
Health & Wellness	804	10.4 %	10.4 %	101	35	53.4 %	12.5 %	+350 bps
Fun & Indulgence ⁽²⁾	244	70.2 %	70.2 %	-8	69	90.0 %	-3.1 %	+5020 bps
Total Strauss Israel	1,048	20.2 %	20.2 %	93	104	966.2 %	8.9 %	+1010 bps

Strauss Coffee:
Israel Coffee	210	5.0 %	5.0 %	30	6	29.5 %	14.6 %	+280 bps
Total Strauss Coffee	1,278	-2.3 %	-9.0 %	90	-56	-37.4 %	7.1 %	-400 bps

International Dips & Spreads:
Sabra (50%) ⁽²⁾	108	31.4 %	19.4 %	35	71	199.0 %	32.4 %	+7540 bps
Obela (50%) ⁽²⁾	19	-6.6 %	-15.8 %	-3	-2	-126.2 %	NM	NM
Total International Dips & Spreads	127	23.6 %	12.0 %	32	69	188.0 %	25.2 %	+6060 bps

Strauss Water	221	5.5 %	4.6 %	21	-5	-17.4 %	9.5 %	-270 bps

Other ⁽²⁾⁽³⁾	1	NM	NM	-24	-11	85.7 %	NM	NM
Total Group	2,675	7.3 %	2.8 %	212	101	93.2 %	8.0 %	+360 bps
(1) 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. (2) Fun & Indulgence figures include Strauss’s 50% share in the salty snacks business. International Coffee figures include Strauss’s 50% share in the Três Corações joint venture (3C) – Brazil – a company jointly held by the Group (50%) and by the local São Miguel Group (50%). International Dips & Spreads figures reflect Strauss’s 50% share in Sabra and Obela. Strauss Water EBIT figures include Strauss’s share in Haier Strauss Water (HSW) in China (49%). Note: Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands. Total figures for International Dips & Spreads were calculated on the basis of the exact figures for Sabra and Obela in NIS thousands.

Non GAAP Figures ⁽¹⁾

First Nine Months
	2023	2022	Change
Total Group Sales (NIS mm)	7,854	7,041	11.5 %
Organic Sales Growth excluding FX	7.5 %	7.6 %
Gross Profit (NIS mm)	2,531	2,099	20.6 %
Gross Margins (%)	32.2 %	29.8 %	+240 bps
EBITDA (NIS mm)	905	606	49.7 %
EBITDA Margins (%)	11.5 %	8.6 %	+290 bps
EBIT (NIS mm)	591	315	87.6 %
EBIT Margins (%)	7.5 %	4.5 %	+300 bps
Net Income Attributable to the Company’s Shareholders (NIS mm)	339	148	128.9 %
Net Income Margin Attributable to the Company’s Shareholders (%)	4.3 %	2.1 %	+220 bps
EPS (NIS)	2.91	1.27	128.6 %
Operating Cash Flow (NIS mm)	135	91	47.6 %
Capex (NIS mm) ⁽²⁾	348	287	21.3 %
Net debt (NIS mm)	2,880	2,517	14.4 %
Net debt / annual EBITDA	2.7x	3.0x	(0.3x)
(1) 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. (2) Fun & Indulgence figures include Strauss’s 50% share in the salty snacks business. International Coffee figures include Strauss’s 50% share in the Três Corações joint venture (3C) – Brazil – a company jointly held by the Group (50%) and by the local São Miguel Group (50%). International Dips & Spreads figures reflect Strauss’s 50% share in Sabra and Obela. Strauss Water EBIT figures include Strauss’s share in Haier Strauss Water (HSW) in China (49%). Note: Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands. Total figures for International Dips & Spreads were calculated on the basis of the exact figures for Sabra and Obela in NIS thousands.

Non GAAP Figures ⁽¹⁾

	First Nine Months
	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. 2022
Sales and EBIT by Operating Segments and Activities
Strauss Israel:
Health & Wellness	2,301	11.2 %	11.2 %	263	51	23.9 %	11.4 %	+120 bps
Fun & Indulgence ⁽²⁾	767	39.4 %	39.4 %	16	265	106.4 %	2.1 %	+4730 bps
Total Strauss Israel	3,068	17.1 %	17.1 %	279	316	857.3 %	9.1 %	+1050 bps

Strauss Coffee:
Coffee Israel	617	3.7 %	3.7 %	83	-8	-8.9 %	13.5 %	-190 bps
International Coffee ⁽²⁾	3,167	7.7 %	-0.2 %	197	-90	-31.2 %	6.2 %	-360 bps
Total Strauss Coffee	3,784	7.1 %	0.4 %	280	-98	-25.8 %	7.4 %	-330 bps

International Dips & Spreads:
Sabra (50%) ⁽²⁾	329	41.0 %	28.2 %	28	107	136.2 %	8.6 %	+4230 bps
Obela (50%) ⁽²⁾	58	-6.1 %	-12.6 %	-6	0	0.7 %	NM	NM
Total International Dips & Spreads	387	31.1 %	19.9 %	22	107	126.0 %	5.7 %	+3440 bps

Strauss Water	613	3.5 %	3.1 %	66	-8	-10.0 %	10.9 %	-160 bps

Other ⁽²⁾⁽³⁾	2	NM	NM	-56	-41	274.4 %	NM	NM
Total Group	7,854	11.5 %	7.5 %	591	276	87.6 %	7.5 %	+300 bps
(1) 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. (2) Fun & Indulgence figures include Strauss’s 50% share in the salty snacks business. International Coffee figures include Strauss’s 50% share in the Três Corações joint venture (3C) – Brazil – a company jointly held by the Group (50%) and by the local São Miguel Group (50%). International Dips & Spreads figures reflect Strauss’s 50% share in Sabra and Obela. Strauss Water EBIT figures include Strauss’s share in Haier Strauss Water (HSW) in China (49%). Note: Financial data were rounded to NIS millions. Percentages changes were calculated on the basis of the exact figures in NIS thousands. Total figures for International Dips & Spreads were calculated on the basis of the exact figures for Sabra and Obela in NIS thousands.

Condensed financial accounting (GAAP)
Third Quarter
	2023	2022	Change
Sales	1,746	1,608	8.6 %
Cost of sales excluding impact of commodity hedges	1,126	1,076	4.7 %
Adjustments for commodity hedges	41	0
Cost of sales	1,167	1,076	8.5 %
Gross profit	579	532	8.6 %
% of sales	33.1 %	33.1 %
Selling and marketing expenses	369	348	6.2 %
General and administrative expenses	118	101	16.5 %
Total expenses	487	449	8.5 %
Share of profit of equity-accounted investees	70	14	431.2 %
Share of profit (loss) of equity-accounted incubator investees	-6	-13	-49.0 %
Operating profit before other expenses	156	84	85.0 %
% of sales	8.9 %	5.2 %
Other expenses, net	-3	-3
Operating profit after other expenses	153	81	87.7 %
Financing expenses, net	-20	-31	-33.5 %
Income before taxes on income	133	50	162.8 %
Taxes on income	-33	-12	167.2 %
Effective tax rate	24.8 %	24.4 %
Income for the period	100	38	161.3 %
Attributable to the Company’s shareholders	80	27	197.6 %
Attributable to non-controlling interests	20	11	73.8 %

Condensed financial accounting (GAAP)
First Nine Months
	2023	2022	Change
Sales	5,090	4,540	12.1 %
Cost of sales excluding impact of commodity hedges	3,280	3,051	7.5 %
Adjustments for commodity hedges	-16	-4
Cost of sales	3,264	3,047	7.1 %
Gross profit	1,826	1,493	22.3 %
% of sales	35.9 %	32.9 %
Selling and marketing expenses	1,045	1,012	3.3 %
General and administrative expenses	359	314	14.1 %
Total expenses	1,404	1,326	5.9 %
Share of profit of equity-accounted investees	162	86	90.6 %
Share of profit (loss) of equity-accounted incubator investees	-23	-12	102.1 %
Operating profit before other expenses	561	241	132.7 %
% of sales	11.0 %	5.3 %
Other expenses, net	58	-34
Operating profit after other expenses	619	207	198.8 %
Financing expenses, net	-50	-25	100.8 %
Income before taxes on income	569	182	212.3 %
Taxes on income	-137	-44	213.2 %
Effective tax rate	24.1 %	24.1 %
Income for the period	432	138	212.0 %
Attributable to the Company’s shareholders	384	96	299.8 %
Attributable to non-controlling interests	48	42	12.9 %

Conference Call

Strauss Group will host a Zoom conference call in Hebrew on Thursday, November 30, 2023 at 14:00 (Israel time) with the participation of company management to review the financial statements of the company for the third quarter of 2023. Following is the information for those wishing to join the online conference:

Meeting URL: https://strauss-group.zoom.us/j/98385104798?pwd=OHE0alp4cWVSUElCdFl2dzFyZVJVQT09

Passcode: 558919

Strauss Group will also host a Zoom conference call in English on Thursday, November 30, 2023 at 15:30 (Israel time) with the participation of company management to review the financial statements of the company for the third quarter of 2023.

Meeting URL: https://strauss-group.zoom.us/j/95173480575?pwd=NkhkNWVuVDZuenMwRXFuUVd2MkZFQT09

Passcode: 215694

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 second quarter of 2023 and the presentation that will accompany the conferences will be available prior to the conference calls on the following websites:

Tase Site

http://www.magna.isa.gov.il

http://ir.strauss-group.com/phoenix.zhtml?c=92539&p=irol-irhome

For further information, please contact:

Liron Ben Yaakov

Head of Communications and Public Relations

Strauss Group Ltd.

972-54-609-1600

972-3-675-2584

[email protected]

Daniella Finn

Director of Investor Relations

Strauss Group Ltd.