#Israel #Financial Performance #Strauss Group #Petah Tikva #Coffee Business

Strauss Group Reports Impressive Q1 2025 Results

On May 28, 2025, Strauss Group Ltd. (TASE: STRS) announced its financial results for the first quarter of 2025, showcasing a significant revenue increase of 15.5% compared to the same period last year. The company’s revenues reached approximately NIS 3 billion, primarily driven by robust performance in its international coffee segment, particularly in Brazil.

Key Highlights

Strauss Group's growth was widespread, affecting all business segments both in Israel and globally. The increase is attributed to strategic investments in infrastructure, a commitment to innovation, and a customer-driven approach. Notably, the company is developing a new production facility for plant-based milk alternatives in Northern Israel, set to be operational by the end of 2025. Additionally, the establishment of new logistics centers in Bror Hayil and Yotvata is set to enhance operational efficiencies.

CEO Shai Babad remarked, "We achieved significant growth across all activities while improving our market share in key categories. Our strategic focus on customer-centric trends in Israel, combined with innovations in our product lineup, has fueled our success."

Despite these successes, Strauss Group faced challenges due to escalating raw material costs, particularly for coffee and cocoa, which affected overall profitability. Operating profit took a hit, amounting to NIS 181 million, a decrease of 11.2% from the previous year. The operating margin slipped to 6.0% from 7.8% in the first quarter of 2024.

Business Segment Performance

Strauss Israel

In the domestic market, Strauss Israel registered a revenue growth of 6.6%, totaling NIS 1.4 billion. However, the operating profit fell to NIS 113 million, reflecting a 25.7% decline due to rising costs associated with coffee and cocoa, as well as a one-off loss from cocoa derivatives.

• - Health & Wellness Segment: Revenues reached NIS 742 million, up 1.5%, with operating profits rising by 18.2%.
• - Fun & Indulgence: This segment, covering snacks and confectionery, reported a sales increase of 9.2%, totaling NIS 394 million, though it experienced an operating loss of NIS 16 million due to the cocoa derivatives loss. The Israel coffee sector under this segment also flourished with a 19.4% rise in sales to NIS 260 million, maintaining an operating profit margin of 15.7%.

Strauss International Coffee

The international coffee segment saw remarkable growth of 45.4%, with sales hitting NIS 1.4 billion. Operating profit for this sector grew to NIS 55 million, leading to an operating margin of 3.9%. In Brazil, where Strauss operates the Três Corações brand, sales soared by 56.4% to NIS 1,008 million, and operating profit tripled to NIS 30 million.

Strauss Water

In line with its growth trajectory, Strauss Water achieved revenues of NIS 206 million, a 6.9% growth year-on-year, with an operating profit of NIS 26 million, reflecting a steady performance with a 12.5% operating margin.

Future Outlook

As Strauss Group navigates through these inflationary pressures, its management remains committed to executing its strategic plan aimed at sustainable growth. The company continues to focus on optimizing operational efficiency, which has become essential amid fluctuating raw material costs. Babad stated that ongoing investments in Israeli industry, including new production and logistics capabilities, underline the commitment to bolster the company’s market leadership.

In summary, Strauss Group’s robust revenue growth in the first quarter of 2025 is a testament to its resilience and proactive strategies in a challenging economic landscape, especially in the face of rising material costs. As the company pushes forward with its development projects and product innovations, its future remains optimistic.