Strauss outpaces Osem in growth
The Strauss Group reported relatively good financial results for the fourth quarter of 2009 and the whole of last year, despite the challenges that faced the food market.
After a few quarters of being adversely affected by unfavorable exchange rates in countries such as Brazil, in the fourth quarter foreign currency exchange rates had a positive impact on Strauss' results.
Fourth quarter sales were NIS 1.7 billion, up 9.6% over the parallel in 2008, partially due to the consolidation with home water purification system manufacturer Tami 4, which was purchased by Strauss in mid-2009.
Increased coffee sales also contributed to Strauss' bottom line, with 9% growth over the parallel. Coffee sales in the fourth quarter totaled NIS 909 million, and were NIS 3.35 billion for the year.
Net profits for the final quarter rose from NIS 56 million in 2008 to NIS 70 million last year. "The year 2009 was not a good year for the soft white cheese and cottage cheese category," said Strauss Israel CEO Zion Balas at a press conference Tuesday. "At the beginning of the year we changed all the cheese product packaging, as part of the revamping of all the packaging. In that category, however, the work was apparently not done well enough, and sales declined. In April, we changed the packaging again, and every month since then cheese sales have improved."
Ofra Strauss, who chairs the group's board and is one of the controlling shareholders, told the press conference about the new production plant being built in the United States at an investment of $70 million-$90 million. The new plant's main purpose is "to expand the dips operations - the chilled spreads sold in the U.S." Strauss Group CEO Gadi Lesin said that the group's salad company, Sabra, increased its market share in the U.S., partly at the expense of the market share controlled by the salad company acquired by Osem.
"In 2009 Sabra's market share in the entire salads market in the U.S. passed the 40% mark," said Lesin. "When we bought Sabra in 2005, its market share was 10%. Tribe [Mediterranean Foods], which back then controlled 22% of the market, currently has only 13% of the American market."
Sabra's sales last year totaled NIS 121 million for the fourth quarter and NIS 430 million for the whole year.
Lesin also commented that despite the slowdown in the market in Israel and around the world, Strauss had not changed its credit terms for either suppliers or clients, but had invested effort in ensuring that clients paid on time.
Following the publication of Osem's fourth quarter and annual financial reports, the company's share price shed 2.6% on Tuesday, but a 10-year retrospective reveals that Osem yielded its shareholders double the returns generated by Strauss shares over the past decade.
Osem, under the stewardship of Aviezer (Gezi) Kaplan, finished the fourth quarter of 2009 with 4.4% growth in revenues, to NIS 788 million. Most of this growth was from overseas acquisitions such as Foodtech International, which makes meat substitute products, and Tribe, which makes chilled spreads, and from the acquisition of infant formula manufacturer Materna from Kibbutz Ma'abarot. Osem's operating profits grew to NIS 107 million, compared to NIS 98 million in the parallel, and profitability was up thanks to streamlining measures such as the combining of several distribution centers. On the bottom line, Osem's net profits grew slightly (by 2%) to NIS 67 million. Even so, Osem's 2008 figures included a one-off pretax profit of NIS 12 million. When that sum is removed from the 2008 total, fourth quarter profits in 2009 were 18% higher than in the parallel.
Osem reported 8% growth in the sales of breaded cutlets ("shnitzels") and heat-and-serve meals, and 23% growth in revenues from salads and deli meats.