Yavne, Israel, March 31 - G. Willi-Food International Ltd. (the "Company" or "Willi Food"), one of Israel's largest food importers and a single-source supplier of one of the world's most extensive range of quality kosher food products, today announced its audited financial results for the fiscal year ended December 31, 2007.
Highlights
- 30% increase in fiscal 2007 revenues over revenues in 2006
- Expanded Scope of Baron Joint Venture
- Ongoing Development of Laish Israeli to Serve as US Platform
- Acquired in 2008 Cheese Distributor in Denmark With U.S. Dairy Import License
- Acquired in 2008 Mediterranean Salad Manufacturer Based in Israel
Revenues for the year ended December 31, 2007 increased 30% to NIS 249.7 million (US$64.9 million) compared to NIS 191.5 million (US$49.8 million) in 2006. This increase was driven primarily by our Baron joint venture and Laish Israeli as well as growth in Willi Food's organic business in the home market of Israel. Gross profit for the year increased 6% to NIS 50.9 million (US$13.2 million) compared to NIS 47.9 million (US$12.4 million) in the prior year. Fiscal 2007 gross margins declined to 20% compared to 25% in 2006 due in part to a steep rise in raw food prices and to a lesser extent, an impairment charge in the amount of NIS 3.2 millions ($0.8 millions) for expired and unsaleable Laish inventory, most of which was acquired from the previous owner of Laish in January 2007.
Mr. Zwi Williger, President and COO of Willi Food commented, "Fiscal 2007 has been a very challenging year for Willi Food. A combination of steep price increases in agricultural commodities, short supply of agricultural commodities and increased demand of agricultural commodities have negatively impacted the food industry. In light of this fact, Willi Food has taken the appropriate measures to position the Company for a stronger fiscal 2008 while the prices for global agricultural commodity throughout the remainder of the year. "
2007 operating income declined 65% to NIS 4.4 million (US$1.2 million) from NIS 12.6 million (US$3.3 million) reported last year. Sales and marketing expenses for the year increased to NIS 24.4 million (US$6.3 million), or 10% of sales, from NIS 21.1 million (US$5.5 million), or 11% of sales for 2006. Selling expenses were mainly kept in control despite Willi Food being a larger company than the prior year. The decline in operating income was partially attributable to a one-time impairment charge in the fourth quarter in the amount of NIS 2.2 milions ($0.5 milions) regarding an unrecoverable accounts receivables adjustment and impairment of goodwill in the amount of NIS 3 millions ($0.7 millions) at Laish.
2007 income before taxes declined to NIS 6.8 million (US$1.8 million) compared to NIS 35.8 million (US$9.3 million) recorded in 2006. Income after taxes and before minority interest for the year declined to NIS 4.3 million (US$1.1 million) compared to NIS 30.4 million (US$7.9 million) for the prior year. Net income for 2007 declined to NIS 2 million (US$0.5 million), or NIS 0.19 (US$0.05) per share compared to net income of NIS 28.6 million (US$7.4 million), or NIS 3.17 (US$0.82) per share, recorded in 2006. The impairment charge was taken by the Company in the fourth quarter of fiscal 2007 after completing a comprehensive audit of its new U.S. distribution center and includes, among others, the charge for unrecoverable accounts receivables adjustment and the charge for expired and unsaleble inventory referred to above.
The Company's Gold Frost subsidiary reported a 20% increase in revenues for 2007 - US$12.9 million as compared with last year. The subsidiary's net profit decreased by 32% to US$1.6 million as compared with last year's net profit. Gold Frost's gross margins decreased to 34% as compared with the previous year due to global increases in the costs of raw dairy products. Gold Frost's income before tax decreased by 44% to $2.0 million from $3.5 million reported last year. Operating expenses for the year increased by 7.4% to $2.5 million from US$2.4 million in 2006. Gold Frost's strategy continues to be broadening the variety of branded kosher products and targeting them at health conscious consumers worldwide. Recently, Willi-Food purchased an additional 14% of Gold Frost in the market (now approximately 90% total ownership), reflecting the Company's confidence in the future of its Gold Frost subsidiary.
Willi Food ended the year with NIS 86.9 million (US$22.6 million) in cash, cash equivalents and marketable securities and minimal debt.
Zwi Williger noted, "Our Gold Frost subsidiary was particularly affected by the inflationary pricing for raw dairy. The rapid increase and volatile pricing throughout the year was due to weather related problems, reduced milk production, and cessation of EU dairy export subsidies while at the same time consumption and demand for dairy increased in growing emerging markets."
Mr. Williger continued, "While the outlook for dairy in 2008 remains uncertain, we continue to monitor the situation closely. In the meantime, Willi Food has taken measures to leverage its expanded infrastructure through smart acquisitions, setting the stage for future growth. In fiscal 2007, Willi Food announced several acquisitions. These core acquisitions are expected to help Willi Food broaden its reach internationally in addition to entering an entirely new vertical market that capitalizes on one of the most recent trends in health and snack foods."
In January 2007, Willi Food acquired the operations and assets of Laish Israeli Food Products Ltd., a U.S. importer and distributor of kosher food products. The goal has been to layer Willi Food branded products into Laish's existing distribution channel while eliminating redundant and unprofitable items in Laish's lineup. Serving as the platform for Willi Food's brand launch, roughly 10% of Laish's inventory, or over 100 items, are now "Willi Food" branded products. The restructuring of Laish is ongoing, and it is our intention to layer in the majority of Willi Food's remaining 300-400 branded products over the next 18-24 months.
With regard to the Baron Family joint venture, Willi Food has been successfully able to significantly increase the revenues of this joint venture. It is Willi Food's intention to continue its strategy to opportunistically layer, intermix and sell Baron and Willi Food products to customers of Baron and Willi Food, while expanding the number of items and geographical reach of these products.
In October 2007, the Company's 90% owned Gold Frost Ltd. subsidiary signed a binding letter of intent to purchase a majority interest from the owners of a dairy distributor in Denmark (the "Distributor"). In the first quarter of 2008, Gold Frost held a 51% interest in the Distributor, and the former owners of the Distributor holds the remaining interest. The Company expects revenue recognition of the Distributor to commence in the first quarter of fiscal 2008. The most significant aspect of this transaction is the fact that the Distributor has a US dairy import license. The Company recently announced that it expects to execute its first purchase order to the US in the first quarter of fiscal 2008.
In November 2007, Willi Food announced its intention to purchase Shamir Salads, an Israeli manufacturer and distributor of pre-packaged chilled kosher Mediterranean dips and spreads in Israel and abroad. The acquisition subsequently closed in the first quarter of fiscal 2008. The Company expects to consolidate the results of Shamir Salads. The Company is also seeking potential opportunities to build a manufacturing plant for these products in the US.
"We anticipate that these acquisitions will propel Willi-Food's ability to expand its global market share," said Mr. Williger. "We have already executed our first US dairy purchase order in the first quarter of 2008 through the acquisition of a Danish cheese distibuter which holds a US import license. It is our intention to expand our chilled and frozen line of dairy products globally when the price for raw materials stabilize and the market accepts the new prices for dairy goods. We continue to seek smart acquisitions in strategic countries."
"We expect 2008 to be an improved year for Willi-Food with profitability," concluded Mr. Williger. "We are operating a much larger company compared to a year ago, and we hope to continue on our accelerated path of revenue growth. We strongly believe in our business model and know that we have the right management team to achieve our goals of expanding the Willi-Food brand internationally. Recently, Willi Investments purchased an additional 4% of G. Willi-Food International and G. Willi-Food International purachsed an additional 14% stake in Gold Frost reflecting management's confidence in the future of the Willi Food organization and the value in the Companies current share prices."
About G. Willi-Food International, Ltd.
G. Willi-Food International Ltd. is one of Israel's largest food importers and a single-source supplier of one of the world's most extensive ranges of quality kosher food products. It currently imports, markets and distributes more than 600 food products manufactured by some 120 top-tier suppliers throughout the world to more than 2,000 customers. Willi Food excels in identifying changing tastes in its markets and sourcing high-quality kosher products to address them. The Company also operated several subsidiaries: Gold Frost Ltd. subsidiary develops and distributes kosher chilled and frozen dairy food products internationally together with its Danish dairy distributor subsidiary; Laish Israeli subsidiary and joint venture with the Baron Family engage in the global import, export and distribution of kosher products worldwide; Shamir Salads is a leading international distributor of pre-packaged Mediterranean foods.
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31,
2 0 0 7 2 0 0 6 2 0 0 7 (*)
NIS US dollars
ASSETS (in thousands)
Current assets
Cash and cash equivalents 61,649 91,398 16,029
Marketable securities 31,267 13,945 8,130
Trade accounts receivable 63,728 48,163 16,570
Receivables and other current assets 4,630 4,499 1,204
Inventories 29,166 19,101 7,583
Total current assets 190,440 177,106 49,516
Fixed assets
Cost 55,621 49,213 14,462
Less: accumulated depreciation and 8,666 6,442 2,253
amortization
46,955 42,771 12,209
Other assets, net 2,221 94 577
239,616 219,971 62,302
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term bank credit 5,978 - 1,554
Trade accounts payable 33,961 20,137 8,830
Due to related parties 3,945 5,677 1,026
Payables and other current liabilities 3,367 6,969 875
Total current liabilities 47,251 32,783 12,285
Accrued severance pay, net 460 347 120
Commitments and contingent liabilities
Warrants to issue shares of subsidiary - 348 -
Minority interest 18,613 14,754 4,840
Shareholders' equity
Share capital:
Ordinary shares NIS 0.10 par value
(authorized - 50,000,000 shares
and outstanding - 10,267,893 shares at
December 31, 2007; 10,267,893 shares at
December 31, 2006) 1,113 1,113 289
Foreign currency translation adjustment (414) - (108)
Additional paid-in capital 61,350 61,350 15,952
Retained earnings 111,243 109,276 28,924
173,292 171,739 45,057
239,616 219,971 62,302
(*) Convenience translation into U.S. dollars.
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31,
2 0 0 7 2 0 0 6 2 0 0 5 2 0 0 7 (*)
NIS US dollars
(in thousands, except for share data)
Sales 249,693 191,460 166,282 64,923
Cost of sales 198,827 143,581 128,215 51,697
Gross profit 50,866 47,879 38,067 13,226
Operating
expenses:
Sales and 24,404 21,100 15,771 6,345
marketing
General and 18,963 14,151 13,544 4,931
administrative
Impairment of 3,054 - - 794
Goodwill
Total operating 46,421 35,251 29,315 12,070
expenses
Operating income 4,445 12,628 8,752 1,156
Financing income, 1,856 4,925 2,501 482
net
Other income, net 470 18,248 35 122
Income before 6,771 35,801 11,288 1,760
income taxes
Income taxes 2,517 5,379 3,567 654
Income after taxes 4,254 30,422 7,721 1,106
on income
Minority interest 2,287 1,807 - 595
Net income 1,967 28,615 7,721 511
Earnings per share
(EPS)
Basic 0.19 3.17 0.9 0.05
Diluted 0.19 3.12 0.9 0.05
Shares used in
computation
of basic and 10,267,893 9,028,223 8,615,000 10,267,893
diluted EPS
(*) Convenience translation into U.S. dollars.