#Israel #Strauss Group #Petah Tikva #Health & Wellness #Coffee International

Strauss Group Reports Impressive Financial Growth in Q2 2025

In a recent announcement, Strauss Group Ltd. (TASE: STRS) disclosed its financial outcomes for the second quarter and the first half of 2025, concluding June 30, 2025. The figures revealed a noteworthy surge in operating profit, up by 61% this quarter. Sales also exhibited solid growth, reaching NIS 3.1 billion, a 12% increase from the previous year.

Overview and Key Highlights

CEO Shai Babad expressed his pride in the company’s resilience, crediting the devoted efforts of the team amid the turbulent backdrop of ongoing regional conflicts, particularly those involving Israel and Iran. The results from their coffee joint venture in Brazil particularly stood out, having doubled operating profit with a notable sales boost of 33%.

Key Highlights of the Report:

• - Strong Sales Growth: The overall sales escalated by nearly 11.5% year-over-year, achieving record figures with adjustments in foreign exchange accounting indicating 15.5% growth.
• - Significant Operating Profit: Operating profit surged to NIS 245 million, accounting for 8% of total sales, compared to last year's quarter where it stood at 5.5%. This represents a healthy margin increase.
• - International Operations: The Coffee International segment contributed greatly to the revenue, with profit enhancements apparent in their international coffee operations, primarily in Brazil.
• - Health & Wellness Segment: This segment also reflected higher sales and profitability, underlining the company's commitment to health-driven products.
• - Market Share Improvement: Strauss Group made strides in its market shares across various categories, further solidifying its standing as a leading player.

Despite strong revenue figures, the net income attributable to shareholders dipped approximately 1.8% to NIS 80 million. However, the significant increase in operating profit illustrates a robust core operational performance.

Segment Breakdown

1. Strauss Israel: Sales in Israel for Q2 reached NIS 1.32 billion, reflecting a year-over-year increase of 8.9%. Enhanced EBIT reached NIS 135 million, also showcasing improvement. This growth was propelled by changes in sales mix and higher volume, effectively offsetting costs rising from cocoa and coffee prices.

2. Health & Wellness: This segment experienced a 6.8% increase in Q2 sales, totalling NIS 806 million. Operating profits surged by 23.4%, reaching NIS 113 million, indicating the strong demand for health-oriented products.

3. Fun & Indulgence: Including snacks and coffee operations, this segment recorded NIS 301 million in Q2 sales. Sales grew by 11% while operating profit exhibited a turnaround from a loss to a nominal profit this quarter.

4. International Coffee: Notably, this sector reported sales of NIS 1.5 billion in Q2, soaring 27.4% year-over-year. EBIT more than doubled, reaching NIS 102 million, showcasing effective pricing strategy and operational efficiency despite higher costs.

Challenges and Future Outlook

Despite the positive financial performance, Strauss Group faces challenges with higher financial expenses following shekel appreciation and related tax expenses due to profit mix. Furthermore, the company encountered a negative free cash flow of NIS 89 million.

Midroog, a Moody's affiliate, has maintained Strauss Group's Aa1.il rating with an upgraded outlook from negative to stable, a reflection of the company’s robust financial health and strategic positioning even amidst global adversity.

Conclusion

In summary, Strauss Group’s remarkable performance in Q2 2025 underlines its strength and sustainability amidst external pressures. The company's proactive strategies in enhancing productivity and expanding new growth avenues will likely provide resilience and further growth as market conditions fluctuate. As Strauss Group continues to innovate and maintain its core brand values, it sets a strong precedent with its comprehensive operations in Israel and abroad. Investors and stakeholders look forward to continued transparency and results in the forthcoming periods.