Strauss Group revenue grows in 2019, coffee performance impacted by Brazilian real

Israel’s Strauss Group wrapped up 2019 with revenues of NIS 8.5 billion (about US$2.4 billion), reflecting 2.6 per cent organic growth excluding foreign currency effects.

The Strauss Group’s operating profit rose in 2019 by 7.9 per cent and amounted to NIS 933 million (US$262 million). The earnings before interest and taxes margin rose to 10.9 per cent, compared to 10.1 per cent in 2018.

“The Group has grown in volume and value terms [organic growth], and for the third year in a row has continued to considerably improve its profit, margins and cash flow. Our agility, resilience and financial stability, strong infrastructure, innovation processes and investment in our brands are an important foundation as we continue to tackle diverse challenges,” says Giora Bardea, CEO of Strauss Group.

“Given our stellar performance in 2019 we are entering 2020 in sound financial position and with robust financial strength. Although [Covid-19] is a continuously developing crisis of which the ramifications are yet to be finalised, we believe we are well positioned to deal with different scenarios following the outbreak of the coronavirus disease in order to continue to meet the growing demand for our products. We hope that the company’s resilience will enable us to maintain strong business continuity.”

The group attributes this improvement to continuous efficiency enhancement measures applied in Strauss Israel and an improvement in the profitability of Strauss Coffee.

Its coffee business recorded revenues of approximately NIS 3.7 billion (US$1.7 billion) in 2019, a drop of 0.1 per cent in organic terms (excluding foreign currency effects) compared to 2018.

Exchange rate differences, notably the depreciation of the Brazilian real against the shekel, eroded the company’s revenues by NIS 223 million (US$102 million), such that in shekel terms, revenues decreased by 5.7 per cent. In Israel, the coffee company grew by 2.2 per cent in 2019, with revenues rising to NIS 754 million (US$298 million). In the Central European countries, Russia and Ukraine revenues rose whilst in other countries revenues decreased.

The Três Corações joint venture in Brazil, a company jointly held by Strauss Group and São Miguel, recorded revenues of approximately NIS 1.8 billion (US$820 million) in 2019, reflecting a drop of 0.1 per cent in local currency (the Brazilian real). In shekel terms, the decrease was 8.6 per cent.

However, during the year, the company grew its market share significantly, increasing from 27.2 per cent in 2018 to 28.3 per cent in 2019.

In the first quarter of 2020, Três Corações announced the acquisition of Mitsui Alimentos for approximately BRL 210 million (US$41 million). The deal is expected to close during the third quarter of 2020.

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