Int'l operations boost Strauss profit

Strong growth in international operations boosted Strauss Group's (TASE:STRS) revenue and profits for the third quarter of 2012.

Revenue rose 3.1% to NIS 2.1 billion for the third quarter from NIS 2 billion for the corresponding quarter of 2011. Organic sales, excluding the effect of changes in exchange rates, rose 4.4%. Net profit attributed to majority shareholders rose 14.5% to NIS 69 million from NIS 61 million. A capital gain of NIS 59 million from the sale on the sale of the Hashachar Tower in Givatayim during the third quarter boosted profits.

Domestic sales fell 1% to NIS 743 million for the third quarter from NIS 750 million for the corresponding quarter.

Strauss president and CEO Gadi Lesin said, "Strauss Group posted 26.1% growth in the non-GAAP operating profit in the third quarter of 2012 thanks to strong performance in the international coffee segment and in Sabra, where sales grew by 34.2% in the quarter. At the same time, the group continues to contend with challenges in its home market in Israel and is implementing dozens of internal streamlining processes. Strauss Israel has refrained from raising the prices of its products, other than a small number of dairy product categories where a moderate increase was inevitable in line with the increase in the price of raw milk."

Strauss Coffee sales rose 2.7% to NIS 1.05 billion for the third quarter from NIS 1.02 billion for the corresponding quarter. Sabra, a joint venture with PepsiCo. Inc. (NYSE: PEP), kept its leading position in the refrigerated flavored spreads and hummus categories, with 32% sales growth to NIS 273 million for the third quarter from NIS 203 million for the corresponding quarter, and 146% non-GAAP operating profit growth to NIS 47 million from NIS 19 million. Obela, the Mexican joint venture with PepsiCo, which began operations in the second quarter, posted NIS 8 million in sales in the third quarter, and had an operating loss of NIS 10 million.

Strauss Water sales rose 5% to NIS 112 million for the third quarter from NIS 106 million for the corresponding quarter. Max Brenner Chocolate sales fell 3.8% to NIS 35 million from NIS 36 million. Strauss also reported a capital loss of NIS 13 million on the sale of five branches of the chain during the third quarter. Strauss owns 40 of the 44 Max Brenner Chocolate Bars worldwide, after opening four branches so far this year. The four US branches are directly owned by the company. 30 branches are in Australia, six are in Israel, three are in Singapore, and one is in the Philippines.

Cash flow from operations tripled to NIS 171 million for the third quarter from NIS 57 million in for the corresponding quarter.

Published by Globes [online], Israel business news - www.globes-online.com - on November 21, 2012