Strauss Group (STRS) Q2 2025 earnings summary

Executive summary

• Achieved strong top-line growth in Q2 and H1 2025, with net sales up 11.5% to NIS 3.1 billion in Q2 and 13.5% to NIS 6.1 billion in H1, driven by price increases and volume growth, especially in international coffee, notably Brazil.

• EBIT improved by over 60% year-over-year in Q2, but net income declined 1.8% in Q2 and 36.7% in H1 due to higher financial and tax expenses.

• Maintained business continuity and food security in Israel amid regional conflict, with ongoing innovation and productivity initiatives.

• Strategic focus on core business, productivity, and innovation, with investments in new facilities and product lines.

• Affirmed Aa1.il rating with outlook upgraded to Stable and successful bond issuance raising over NIS 460 million.

Financial highlights

• Q2-2025 net sales rose 11.5% to NIS 3,073m; H1-2025 net sales up 13.5% to NIS 6,063m.

• Q2-2025 EBIT increased 60.8% to NIS 245m; H1-2025 EBIT up 19.8% to NIS 426m.

• Q2-2025 net income decreased 1.8% to NIS 80m; H1-2025 net income fell 36.7% to NIS 153m, mainly due to higher financial expenses and taxes.

• Gross margin declined to 28.3% in Q2-2025 (from 30.5%) and to 27.2% in H1-2025 (from 32.1%).

• Free cash flow improved sequentially in Q2 but remained negative for H1-2025 due to working capital and high raw material costs.

Outlook and guidance

• Long-term targets reaffirmed: 5% CAGR in sales (2024-2026), 10-12% EBIT margin by 2026, and NIS 300-400m in run-rate savings by 2026.

• Expecting positive cash flow and margin improvement in H2 2025, especially in confectionery as cocoa prices decline and hedging strategies take effect.

• New milk alternatives plant and expanded Yotvata facility expected to drive significant sales and EBIT growth.

• CAPEX expected to reach 5-7% of sales through 2026, with 85% of sales from core business.