Strauss Group ends 2021 with 7.4% growth; presents five-year strategy and sustainability report
Strauss Group has wrapped up 2021 with solid results. The company's revenue in 2021 amounted to NIS 8.75 billion, reflecting 7.4% organic growth excluding foreign currency effects. The improvement is largely due to growth in sales volumes and an increase in the coffee company's sales prices in Brazil and CEE, business growth in the water company and sales growth and market share gains in Israel, mostly in the dairy and dairy alternatives category. Gross profit was NIS 3.2 billion, whereas the gross margin eroded to 36.9% compared to 38.7% last year following rising input and raw material prices – notably green coffee, milk, and shipping and packaging costs. Growth in sales volumes offset the gross profit erosion.
Strauss generated NIS 980 million in operating profit in 2021 and has maintained an operating margin of 11.2%, similar to last year, thanks to gains on its investments in its FoodTech business. Income attributable to shareholders amounted to NIS 639 million, with net profit growth largely due to the increase in operating profit and a significant drop in financing expenses.
Strauss Israel has wrapped up 2021 with 4.2% sales growth and, according to StoreNext, holds a 12.4% share of the Israeli food market (the barcoded market). The increase in revenue is the result of sales growth in the dairy and dairy alternative category, as well as in the salty snack category, the food category and in Yad Mordechai products (honey, olive oil, jams and sauces).
The coffee business in Israel grew 2.3%, largely due to the recovery of the away-from-home (AFH) sales channels, including the Elite Café chain, which has resumed operations.
In Brazil, Strauss Coffee's sales grew by 23.2% in local currency in 2021, mainly as a result of the acquisition of Mitsui Alimentos and higher sales prices. Apart from Poland, sales growth was delivered in all CEE countries due to price increases as well as growth in volume.
Sabra reported stability in sales in local currency with USD 184 million in revenue (representing 50%) and a 42% drop in operating profit to USD 11 million (50%), the result of an increase in manufacturing costs due to the partial shutdown of the plant in December as well as increased labor costs. Obela delivered revenue of NIS 85 million in 2021 (representing 50%), an increase of 4.9%, and recorded an operating loss of NIS 6 million (50%), similar to the corresponding period last year.
Strauss Water grew by 10.2% with sales of NIS 736 million thanks to growth in the customer base and in sales of new appliances. The water business in China (Haier Strauss Water (HSW)), delivered RMB 1.3 billion in revenue, reflecting 15.3% growth, largely due to the opening of stores and the recovery of the local economy following the pandemic.
FoodTech activities through The Kitchen Hub are, and in 2021 continued to be, a strategic activity for the Group. During the year, cultured meat producer Aleph Farms, established by Strauss, raised USD 105 million, and other startups in the incubator, including Bio-Fence and others, completed funding rounds. As a result of these rounds, last year Strauss recorded a profit of NIS 71 million.
Strauss presents its strategy for the next five years
On March 21, 2022, the Group's board of directors approved a new 5-year strategic plan – Taste the Future – in alignment with the Group's new purpose, Nourishing a Better Tomorrow, its long-term aspirations and evolving trends.
The Group has set growth as its main strategic goal, with a long-term ambition to grow at an average annual rate of about 5%. For this purpose, the company will increase its total investments in the coming years, both organically, investing in existing activities in the company today, and by allocating NIS 1 billion or more towards mergers and acquisitions, with an emphasis on sustainable growth in accordance with the Group's mission statement.
The strategy consists of three main pillars: (1) Renewal and expansion of the business core (2) Building new horizons (3) Business transformation in the way the company operates.
2021 Sustainability Report
The Group's 2021 Sustainability (ESG) Report is being published for the 14th year, and this year once again, accompanies the Annual Financial Statements. Thus, Strauss is announcing the essence of its social, economic and environmental impacts on the same date as part of its commitment to transparency in relation to all stakeholders.
As demonstrated by the report, Strauss Group has continued to improve in most international ESG scores measuring its performance and goals.
The Group continued to manage its business operations based on consideration for the environment and mitigation of its impacts, such as reducing energy consumption, greenhouse gas emissions, water consumption, waste production, promotion of sustainable packaging, etc. In each of these areas the Group set goals and is working to improve its performance year by year while developing dedicated projects, as it perpetually aspires to do better and reduce negative impacts on the environment.
The Sustainability Report also presents the Group's ESG targets for 2030. The full report is available at https://sustainability.strauss-group.com/
