Strauss Group Q2 profit plunges 58% after product recall

Food company Strauss Group has reported a 58% drop in quarterly profit to NIS 55 million in the second quarter of this year from NIS 130 million in the corresponding quarter of 2021. The drop is due to the recall of products and the halting of production at the company’s confectionary factory in northern Israel in April this year after a salmonella outbreak. The factory has still not resumed operation.

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Quarterly sales declined 2.5% to NIS 1.42 billion, and operating profit shrank by 65%, totaling NIS 73 million.

Last week, Strauss Group notified the Tel Aviv Stock Exchange that its CEO and president Giora Bardea, who was appointed to the chief executive role in 2018 and has worked at the group for 26 years, had tendered his resignation. Bardea will step down “at a time to be agreed with the company, after a new CEO has been found and appointed,” the notification said.

Commenting on the second quarter results, Bardea said, “The first six months of 2022 reflect the Group’s inherent resilience as a diverse global company and its ability to successfully contend with a challenging macroeconomic environment along with internal challenges. In the past few months, we have simultaneously tackled two complex incidents -the confectionery recall in Israel and the adjustments at Sabra’s plant in the USA – both of which have negatively affected on the Group’s results in the current half-year.

“At the same time, the coffee and water companies both delivered excellent performances, impressive sales growth and an increase in profit.”

In the announcement of its second quarter results, Strauss Group stated : “The company has performed cleaning operations, has invested in infrastructure to ensure improved quality and food safety standards, and is presently preparing for the gradual resumption of production under strict control. A public announcement will be made accordingly, following receipt of approval from the Ministry of Health.”

Strauss Group’s share price is up 1.5% on the Tel Aviv Stock Exchange this morning

Published by Globes, Israel business news – en.globes.co.il – on August 16, 2022.

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