Strauss sales fell despite price hikes, but profit doubled

Strauss closed the second quarter of 2026 with a decline in sales alongside a sharp improvement in gross and operating profitability and a doubling of net profit to 195 million shekels. The results were influenced, among other things, by the strengthening of the shekel, a decrease in green coffee prices in Brazil, and the sale of the Elite coffee chain. The company announced a dividend distribution of 180 million shekels. Strauss shares jumped by more than 5% in trading on the Tel Aviv Stock Exchange.

Group sales fell by 6.7% to 2.87 billion shekels. Excluding the currency effect, the decline was more moderate and amounted to 1.9% compared to the corresponding quarter last year. The decrease in green coffee prices, the strengthening of the shekel, and efficiency measures taken by the company increased gross profit by 13.6% to 986 million shekels. The gross profit margin rose to 34.4% of sales, compared to 28.3% in the corresponding quarter. A compensation of 27 million shekels received by Strauss from the insurance company as part of a settlement agreement following the salmonella incident at the candy factory in 2022 also contributed to the results. Operating profit rose by 41.9% to 363 million shekels, and its share of sales rose to 12.6%, compared to 8.3% last year.

In Israel, a weaker picture was recorded on the sales side. Although in June last year Strauss raised the prices of coffee and chocolate products by up to 16% and the prices of some dairy products by 1.5%, sales of operations in Israel fell by 1.5% to 1.32 billion shekels. The decline was mainly due to the sale of the Elite coffee chain and the cessation of distribution of Primor chilled juices, which moved to Osem. Sales in the Health and Wellness segment recorded stagnation and fell by 0.1% to 804 million shekels, mainly due to the cessation of Primor distribution. This is despite the fact that in August last year the company launched a milk substitute plant with an investment of 270 million shekels, which allowed it to start producing Alpro products in Israel, which had been imported until then. In addition, the company launched an innovative dairy product under the Cow free brand, a dairy product not from cows, but its contribution to sales remained marginal.

Sales in the Pleasure and Indulgence segment, which includes snacks and sweets, grew by only 1.8% to 396 million shekels, despite the unusually high price increase caused by a surge in cocoa prices. Coffee operations in Israel fell by 11.1% to 190 million shekels due to the sale of the Elite coffee chain. However, excluding the sale of the chain, the activity still showed a decline of 3.1%. The low growth in candy sales and the decline in coffee sales indicate a reduction in consumption and a quantitative decrease, which the company estimates is due to the fact that this is a comparison with the war period in Gaza, when stockpiling and hoarding of coffee in the home pantry were recorded.

The strengthening of the shekel, which worked in the company's favor when purchasing raw materials globally, as well as the efficiency measures it took, led to an 8.2% increase in gross profit in Israel's operations, which amounted to 500 million shekels. The growth boosted gross profitability to 38.4% compared to 35% in the corresponding quarter last year. The compensation from the insurance company pushed operating profit in Israel up by 46% to 198 million shekels and operating profitability to 15.2% of sales. In fact, the compensation helped the candy segment, which in the corresponding quarter last year showed an operating profit of 1 million shekels (0.5% operating profitability), to show an operating profit of 52 million shekels and a profitability of 16.7% of sales.

International coffee operations recorded a 13.1% decline in sales in the quarter to 1.33 billion shekels, following the strengthening of the shekel against the Brazilian real and a decrease in sales prices in Brazil due to the drop in raw material prices. Operating profit in the activity jumped by 44.3% to 148 million shekels, which boosted operating profitability to 11.1% compared to 5.7% in the corresponding quarter, due to the decrease in green coffee prices. Strauss Water sales grew in the quarter by 7.1% to 233 million shekels, following an increase in the customer base in Israel, and recorded a 4.9% increase in operating profit, which amounted to 28 million shekels, which led to an erosion in operating profitability to 11.8% of sales, compared to 12.1% in the corresponding quarter. Sales of the Haier Strauss Water company (49%), which operates mainly in China in the field of drinking water filtration, recorded a 9.8% decline in sales in the quarter, which amounted to 213 million shekels, and a 26.8% decline in net profit, which amounted to 15 million shekels.

Regarding the decline in raw material prices, which has not yet been reflected in consumer prices in Israel, Strauss noted that in the first half and the second quarter there was a significant decrease in the average prices of cocoa and green coffee. However, since the beginning of July, Arabica coffee prices have risen by 8% and cocoa prices by 11%, while the price of Robusta coffee has remained without significant change. The price of milk has also fallen since the end of July by 5.1% compared to its price at the end of the second quarter. However, according to the company, "the impact of changes in raw material prices on the company's material usage cost is gradual due to the group's procurement processes and hedging policy."