Yavne, Israel, August 27 - 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 unaudited financial results for the second quarter and for first six months ended June 30, 2009.
Second Quarter Fiscal 2009 Summary
- 6.0% increase in sales over second quarter of 2008
- 6.6% increase in gross profit over second quarter of 2008
- 21.3% gross margin in second quarter of 2009 compared with 21.2% gross margin in second quarter of 2008
- Operating income of NIS 6.2 million compared to operating expense of NIS 1.4 million in second quarter 2008
- Income before taxes on income of NIS 6.5 million compared to expense before taxes on income of NIS 1.1 million in second quarter 2008
- Income after taxes on income of NIS 5.3 million compared to loss after taxes on income of NIS 1.4 million in second quarter 2008
- Net income related to Company Shareholders of NIS 5.3 million compared to net loss related to Company Shareholders of NIS 2.0 million in second quarter 2008
Willi-Food's operating divisions include Willi-Food in Israel, wholly owned Gold Frost - a designer, developer and distributor of branded kosher dairy food products, the Company's global kosher trade and export joint venture with the Baron family, and Shamir Salads - an Israeli distributor and manufacturer of Mediterranean style salads. As previously reported by the Company on July 27, 2009, the Company now holds 100% of the shares of Gold Frost following completion of its tender offer for Gold Frost shares, and Gold Frost also sold of its 51% interest in the Danish dairy distributor.
Revenues for the second quarter of 2009 increased by 6.0% to NIS 83.8 million (US$ 21.4 million) compared to revenues of NIS 79.0 million (US$ 20.2 million) in the second quarter of 2008. The Company achieved this increase despite the cessation of the operations of Laish Israeli - the Company's U.S. subsidiary during July 2008, as reported by the Company on July 14, 2008. The increase was mainly due to expanded product lines that the Company had launched and increasing sales of existing products to new and existing customers.
Gross profit for the second quarter of 2009 increased by 6.6% to NIS 17.9 million (US$ 4.6 million) compared to gross profit of NIS 16.8 million (US$ 4.3 million) in the second quarter of 2008. Second quarter gross margin was 21.3% compared to gross margin of 21.2% for the same period in 2008.
Since the beginning of the recent recession, the Company has identified pressures in the market to lower prices and a movement of consumers to lower priced products; the Company prepared for this from the beginning of 2009. Due to the Company's lower price products for which the Company believes demand has grown, the Company's expectations have grown for increased sales and improved profits.
The Company anticipates 2009 second half profits and profit margins to be better than in the comparable period in 2008 and in the first half of 2009 for a number of reasons. First, the Company has been successful in adjusting the selling prices of its products to consumers in accordance with product prices of the Company's suppliers, which has enabled the Company to increase its gross profits margins. Second, during the last five months, the U.S. dollar has depreciated against the New Israeli Shekel by approximately 10%, which has lowered the product purchase prices that the Company pay in NIS to its suppliers.
Willi-Food's operating income for the second quarter of 2009 was NIS 6.2 million (US$ 1.6 million) compared to operating expenses of NIS 1.4 million (US$ 0.4 million) reported in the comparable quarter of last year. Selling expenses as a percentage of revenues decreased in the second quarter of 2009 to 8.9% compared to 10.7% in the second quarter of 2008. General and administrative expenses as a percentage of revenue decreased in the second quarter of 2009 to 6.5% from 9.8% in the second quarter of 2008. Part of the decrease in selling and general and administrative expenses was attributed to the actions taken by the Company's management during the first quarter of 2009 to reduce the Company's expenses.
Willi-Food's income before taxes for the second quarter of 2009 was NIS 6.5 million (US$ 1.7 million) compared to loss before taxes of NIS 1.1 million (US$ 0.3 million) recorded in the second quarter of 2008. Willi-Food's net income in the second quarter of 2009 was NIS 5.3 million (US$ 1.4 million) compared to net loss of NIS 1.4 million (US$ 0.4 million) recorded in the second quarter of 2008. Willi- Food's net income related to Company Shareholders in the second quarter of 2009 was NIS 5.3 million (US$ 1.4 million), or NIS 0.52 (US$ 0.13) per share compared to net loss related to Company Shareholders of NIS 2.0 million (US$ 0.5 million), or NIS 0.19 (US$ 0.05) per share, recorded in the second quarter of 2008.
Willi-Food ended the quarter with $27.4 million in cash and securities and $4.2 million in short-term debt. Six-Month Results
Willi-Food's revenues for the six-month period ended June 30, 2009 decreased by 3.3% to NIS 179.3 million (US$ 45.8 million) compared to revenues of NIS 185.5 million (US$ 47.3 million) in the first half of 2008. Gross profit for the period decreased 15.3% to NIS 39.7 million (US$ 10.1 million) compared to gross profit of NIS 46.8 million (US$ 11.9 million) for the six month period in 2008. 2009 first half gross margins were 22.1% compared to gross margins of 25.2% in the same period in 2008.
Operating income for the first half of 2009 increased by 9.5% to NIS 14.7 million (US$ 3.7 million) from NIS 13.4 million (US$ 3.4 million) reported in the comparable period of last year. First half 2009 income before taxes was NIS 15.0 million (US$ 3.8 million) compared to NIS 12.0 million (US$ 3.1 million) recorded in the first half of 2008. Net income related to Company Shareholders for the first half of 2009 increased by 73.9% to NIS 11.5 million (US$ 2.9 million), or NIS 1.12 (US$ 0.29) per share compared to net income related to Company Shareholders for the first half of 2008 of NIS 6.6 million (US$ 1.7 million), or NIS 0.64 (US$ 0.16) per share.
Outlook
Mr. Zwi Williger, President and COO of Willi-Food commented, "We are very pleased with our strong second quarter 2009 results in the current challenging environment. We have been able to grow revenues, despite the closing of Laish in July 2008, through successfully launching new items into our product line, as well as increasing sales of existing products to new and existing customers, and we were able to contain costs to an acceptable degree despite the immediate challenges. We have seen strong market response to our expanded product lines. We expect to launch additional new product lines in the second half of 2009, and we continue to develop new innovations food products."
"Willi-Food achieved net income related to Company Shareholders of NIS 5.3 million in the second quarter of 2009 - margin of 6.4% of revenues. The net income related to Company Shareholders without the effect of our subsidiaries - Shamir salads and Baron joint venture, that together achieved net loss of NIS 0.85 million in 2009 second quarter, would have been higher. Our strong financial results for the second quarter of 2009 demonstrate Willi-Food's ability to capitalize on what we believe to be the growing interest of consumers in the kosher market. We are able to differentiate our company through our success at becoming a high margin business in a low margin industry. We are pleased to consistently deliver significantly higher margins than those generated by most other companies in our industry."
"We analyzed the recession that began in our home market and in fact, the economic indicators, as well as the feedback from our customers, showing that the measures that we took is putting us in a good position for future growth. Willi-Food has taken the appropriate measures to position the Company for a stronger fiscal 2009 and 2010 and we remain focused on maximizing long-term profitability."
"We are carefully reviewing our merger and acquisition strategy. The U.S. remains a strategic region of interest for Willi-Food, and for now, we are seeking more customers to distribute our products; customers who wish to grow their volume and diversify their line of premium kosher products. Our line of products includes over 600 products exclusively distributed by Willi-Food and Shamir Salads. The dynamics of the industry are driving demand for innovative kosher products, and we believe that Willi-Food has the infrastructure and development expertise to deliver. Our strategy is to leverage Willi-Food's global supplier relationships and expertise in product development to capitalize on the growing demand for innovative kosher products for both kosher and health consumers in the U.S. The health benefits of eliminating animal fats in the 'kosherizing' process, in our dairy products, make our products attractive to consumers looking for better tasting low-cholesterol and low-fat alternatives."
Mr. Williger concluded, "We continue to work to expand the footprint and brand recognition of Willi-Food globally while diversifying our product base in order to hedge against any single event impacting our results. We are looking for improved Willi-Food's results in the second half of 2009 as compared to our 2008 second half results and as compared to 2009 first half
results."
Update on Shamir Salads
As previously announced on June 1, 2009, the district court in Tel Aviv issued a temporary injunction against the minority shareholders of Shamir Salads (the "Sellers"), with whom the Company had entered into a January 2, 2008 agreement to purchase approximately 51% of the shares of Shamir Salads (the "Shamir Agreement"). Pursuant to the injunction issued by the court, the Sellers are prohibited from taking any action not in accordance with the signatory rights in Shamir Salads in effect prior to May 18th, performing any disposition of the shares of Shamir Salads held by the Company, taking any action not in accordance with the articles of association of Shamir Salads as in effect prior to May 18th, 2009, and/or interfering with the functions of Shamir Salads' board of directors as composed prior to May 18th, 2009. In addition, pursuant to the injunction, the Sellers are prohibited from interfering with the functions of the co-CEO of Shamir Salads nominated by the Company and/or from preventing the deputy CFO of Shamir Salads' from participating in the discussions to approve the financial statements of
Shamir Salads.
On June 17, 2009, the Sellers petitioned the district court in Tel Aviv for temporary relief against the Company and others, a declaratory judgement and other relief in connection with an alleged fundamental breach by the Company of the Shamir Agreement and for the return of the shares in Shamir Salads and the consideration paid therefore. On June 22, 2009, an arbitrator was chosen to address all disputes between the parties. As part of the arbitration proceeding, the Sellers and the Company each submitted a complaint against the other for damages on August 4, 2009. The Company intends to vigorously defend its rights in this matter. Until the arbitration procedures will end, the temporary injunction against the Sellers will remain
in effect.
Joint venture with the Baron Family
It has recently been discovered that a customer that owes Baron approximately Euro 0.4 million, terminated its operations. Baron has security interests on this debt, including a first priority lien on a portion of the house of the customer, and as a result no reserve has been set aside for this debt in 2009 second quarter. At this time the Company is examining the nature of the security interests, and following such examination, the Company will decide if there is a need to set aside a reserve for this debt in the third quarter of this year. In the event the Company decides that there is a need to set aside a reserve, the Company will consider making a claim against the Baron family on the damage they caused to the Company in their capacity as managers, due to the fact that they breached their fiduciary duties against the joint venture and sold to a customer without approval and against the decision of the board of directors of the joint venture.
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 2,500 food products manufactured by some 120 top-tier suppliers throughout the world to more than 1,500 customers. Willi-Food excels in identifying changing tastes in its markets and sourcing high-quality kosher products to address them. The Company also operates several subsidiaries: its wholly owned subsidiary, Gold Frost Ltd., develops and distributes kosher chilled and frozen dairy food products internationally; the joint venture with the Baron Family engages in the global import, export and distribution of kosher products worldwide; and Shamir Salads is a leading international manufacturer and distributor of pre-packaged chilled Mediterranean dips and spreads. For more information, please visit the Company's website at http://www.willi-food.co.il.
NOTE A: Convenience Translation to Dollars
The convenience translation of New Israeli Shekels (NIS) into U.S. dollars was made at the rate of exchange prevailing on June 30, 2009, U.S. $1.00 equals NIS 3.919. The translation was made solely for the convenience of the reader.
NOTE B: IFRS
The Company's consolidated financial results for the six-month and three-month ended June 30, 2009 are presented in accordance with International Financial Reporting Standards ("IFRS").
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31, June 30, December
31,
2009 2008 2009 2008
NIS US dollars (*)
(in thousands)
ASSETS
Current assets
Cash and cash equivalents 95,250 78,749 24,305 20,094
Financial assets carried at
fair value through profit or
loss 12,150 9,367 3,100 2,390
Trade receivables 82,383 79,599 21,021 20,311
Other receivables and prepaid
expenses 4,230 3,987 1,079 1,017
Current tax assets 351 2,456 90 627
Inventories 20,513 34,417 5,234 8,782
Total current assets 214,877 208,575 54,829 53,221
Fixed assets
Cost 56,056 55,574 14,304 14,181
Less: accumulated depreciation 15,069 13,467 3,845 3,436
and amortization
40,987 42,107 10,459 10,745
Prepaid expenses 12,975 12,539 3,311 3,199
Goodwill 3,829 3,829 977 977
Intangible assets 4,961 5,181 1,266 1,322
Deferred taxes 454 1,111 116 283
Total non-current assets 63,206 64,767 16,129 16,526
278,083 273,342 70,958 69,747
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities
Short-term bank credit 16,498 17,562 4,210 4,481
Trade payables 46,568 53,728 11,883 13,710
Accruals 5,328 6,197 1,360 1,581
Current tax liabilities 2,054 1,050 524 268
Other payables and accrued
expenses 6,607 4,971 1,685 1,268
Employees Benefits 2,384 2,544 608 649
Total current liabilities 79,439 86,052 20,270 21,957
Non-current liabilities
Long-term bank loans 144 267 37 68
Deferred taxes 259 442 66 113
Warrants to issue shares - 5 - 1
Employees Benefits 1,005 994 256 254
Total long term liabilities 1,408 1,708 359 436
Shareholders' equity
Share capital NIS 0.10 par
value
(authorized - 50,000,000
shares, issued
and outstanding - 10,267,893
shares 1,113 1,113 284 284
Premium 59,056 59,056 15,069 15,069
Capital fund 247 247 63 63
Foreign currency translation
reserve 324 369 83 94
Retained earnings 122,942 111,447 31,371 28,438
Noncontrolling interest 13,554 13,350 3,459 3,406
197,236 185,582 50,329 47,354
278,083 273,342 70,958 69,747
(*)Convenience translation into U.S. dollars
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Six months Three months Six months
ended June 30, ended June 30,
2009 2008 2009 2008 2009 2008
NIS US dollars (*)
In thousands (except per share and share data)
Sales 179,328 185,481 83,758 79,036 45,758 47,328
Cost of sales 139,674 138,659 65,893 62,271 35,640 35,381
Gross profit 39,654 46,822 17,865 16,765 10,118 11,947
Selling
expenses 15,427 17,538 7,462 8,436 3,936 4,475
General and
administrative
expenses 10,887 13,901 5,463 7,752 2,778 3,547
Other (Income)
Expense (1,333) 1,981 (1,238) 1,981 (340) 505
Total
operating
expenses 24,981 33,420 11,687 18,169 6,374 8,527
Operating
income
(Expense) 14,673 13,402 6,178 (1,404) 3,744 3,420
Financial income 935 (1,514) 263 (771) 239 (386)
Financial expense 646 (75) (69) (1,042) 165 (19)
Income 14,962 11,963 6,510 (1,133) 3,818 3,053
(expense
before
taxes on
income
Taxes on
income 2,883 3,750 1,189 312 736 957
Income (loss) 12,079 8,213 5,321 (1,445) 3,082 2,096
after taxes on
income
Related to:
Company 11,495 6,609 5,319 (1,986) 2,933 1,687
Shareholders'
Minority 584 1,604 2 541 149 409
interest
Net income 12,079 8,213 5,321 (1,445) 3,082 2,096
(loss)
Earnings per
share data:
Earnings per
share:
Basic 1.12 0.64 0.52 (0.19) 0.29 0.16
Diluted 1.12 0.64 0.52 (0.19) 0.29 0.16
Shares used in
computing
basic and
diluted
earnings per
ordinary 10,267,893
share: 10,267,893 10,267,893 10,267,893 10,267,893 10,267,893
(*) Convenience translation into U.S. dollars