• Organic Growth: 8.6% for the full year 2024.
• Revenue Growth: 6.2% for the full year 2024.
• Gross Profit: Decline due to increased costs of goods, particularly cocoa and coffee.
• EBIT: Impacted by lower margins and high finance costs.
• Net Profit: Affected by high finance costs and lower margins.
• Cost Savings Target: 300 to 400 million shekels by 2026, with more than a third achieved.
• CapEx Investments: 5-7% of revenue, with 650 million shekels invested in 2024.
• Dividend Declared: 360 million shekels for the year.
• Net Debt: Declined to less than 2 billion shekels at the end of 2024.
• Gearing Ratio: Reduced to 1.7.
• Brazil Operating Profit: Second highest ever, despite high coffee prices.
• Water Business Profit: Increased by almost 30%, surpassing 100 million shekels.
• Confectionery Revenue: Exceeded 2021 levels with fewer SKUs.
• Health and Wellness Margins: Increased from 11.6% to 12.6%.
• Finance Costs: Increased by 13 million shekels in Q4 2024.

• Warning! GuruFocus has detected 10 Warning Signs with XTAE:STRS.

Release Date: March 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Strauss Group Ltd (XTAE:STRS) achieved substantial growth in 2024 with 8.6% organic growth, aligning with strategic goals.
• The company has made significant progress in its water business, particularly in China, becoming the number two player in water purification.
• Strauss Group Ltd (XTAE:STRS) has successfully launched new premium brands in Brazil to counteract the erosion of coffee prices.
• The company has shown resilience by maintaining and even exceeding pre-recall market shares in its confectionery business.
• Strauss Group Ltd (XTAE:STRS) has made significant investments in productivity and infrastructure, with a focus on operational excellence and strategic procurement.

Negative Points

• The company faced a decrease in gross profit and EBIT margins due to increased costs of goods, particularly cocoa and coffee prices.
• High finance costs negatively impacted net profit, with interest costs increasing significantly.
• Despite growth, the gross profit margin declined due to high commodity inflation, particularly in cocoa and green coffee.
• Strauss Group Ltd (XTAE:STRS) experienced a decrease in operating profit in its Coffee International segment, mainly from Central Eastern Europe.
• The company is still facing challenges in expanding its margins due to ongoing high costs of cocoa and coffee.

Q & A Highlights

Q: Can you give any color on the dynamics around what's driving the strong growth in Brazil? And also can you comment on the progress of penetration with new products there? A: Growth in Brazil is mainly driven by substantial price increases due to the high erosion of green coffee prices. Additionally, we are investing in non-RNG categories, selling coffee machines, and expanding our alternative milk and ready-to-drink products. We are also exploring new categories and M&As to further drive growth.

Q: What are your plans for the kitchen hub? A: We are looking into divesting our activities in the kitchen hub to focus on core business areas. We will retain technologies that directly contribute to our business but will not focus on overseeing the broader food tech industry.

Q: What are some of the additional steps for this year and next to reach your 2026 goals? A: Key steps include launching new products, improving margins in Brazil, investing in non-RNG segments, reducing SKUs, and focusing on innovation in snacking. We will also open a new plant for alternative milks and continue to enhance company culture and execution.

Q: How did the company manage to maintain growth despite high cocoa and coffee prices? A: Despite high cocoa and coffee prices, we managed to maintain growth through productivity initiatives and price adjustments. We also focused on mitigating costs and improving operational efficiency, which helped offset the impact of commodity inflation.

Q: Can you elaborate on the financial impact of the Sabra and Novela divestment? A: The Sabra and Novela divestment yielded a net profit of 356 million shekels and increased our net cash position by 730 million shekels. This has improved our financial flexibility and stability, allowing us to declare a combined dividend of 360 million shekels.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.