Strauss Group Ltd. (STRS), the second- largest Israeli food producer and marketer, said third-quarter profit doubled and revenues advanced even as sales were hurt by the effect of exchange rate fluctuations.
The company reported a 3.1 percent rise in sales to 2.1 billion shekels ($536 million). Organic sales, excluding the effect of changes in exchange rates, grew by 4.4 percent, the company said in a PRNewswire statement today. Net income for the third quarter rose to 105 million shekels from 47 million shekels in the same period a year earlier, according to a filing with the Tel Aviv Stock Exchange today. Strauss shares gained 1.1 percent to 43.55 shekels in Tel Aviv.
“Overall there was a slightly negative impact on sales from foreign exchange movements,” with a 9 percent decline of the Brazilian Real against the shekel, Gil Dattner, an analyst at Bank Leumi Le-Israel (LUMI), said by phone today.
Total coffee sales rose 2.7 percent in the quarter to 1.05 billion shekels, Strauss said in the statement. Excluding the impact of currency exchange rates, the growth amounted to 7.6 percent, the company said. The growth in coffee sales was led by Russia, Poland and Israel. Coffee sales to Brazil decreased, the company said.
Profitability in the coffee segment “improved markedly due to a combination of retail price increases and lower coffee prices,” Dattner said in an emailed note today. “The company’s salads business is increasingly becoming a key asset in the group’s mix.” Third-quarter salad sales totaled 273 million shekels compared with 203 million shekels a year earlier.
The group is implementing cost-cutting strategies in Israel to refrain from raising prices of its products, the company said in the statement. Marches that drew thousands of protesters in the streets of Tel Aviv last year led the company to reduce the prices on some of its products and to target overseas markets, including Latin America and Europe. The protests also spurred Israeli policy makers to propose measures to increase competition in the food-supply sector.
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