Strauss Group Ltd.

Group sales reached ILS 2.87 billion in Q2, down 1.9% on a like-for-like basis. Group EBIT was ILS 363 million, up 42% year over year, with EBIT margin rising to 12.6% from 8.3%. Net income more than doubled to ILS 195 million. For the first half, group sales were ILS 5.87 billion and slightly up on a like-for-like basis, EBIT rose 53% to ILS 679 million with margin at 11.6% versus 7.3%, and net income reached ILS 376 million, up about 120%. Free cash flow improved to ILS 150 million in the quarter from negative ILS 89 million a year ago, and net debt was ILS 2.5 billion with net debt-to-EBITDA at 1.5x versus 2.4x last year. Forward guidance: management said it remains comfortable reaching 10% to 12% EBIT margin for 2026, likely toward the higher end, but did not provide formal next-quarter guidance.

CEO Shai Babad framed the quarter as evidence that Strauss has built a “new platform of profit” through core-brand focus, portfolio optimization and productivity. He emphasized that the company is entering a stronger phase of sustainable margins, with Brazil, Israel and Water all contributing, and said the current strategy is nearing completion ahead of a new 2027 to 2030 plan. His tone was confident and forward-looking, especially around core categories, productivity, and using AI and financial discipline in the next strategy cycle.

CFO Tobi Fischbein highlighted the hard numbers: Q2 group sales of ILS 2.87 billion, EBIT of ILS 363 million, net income of ILS 195 million, and free cash flow of ILS 150 million. He noted the margin expansion was driven by Strauss Israel and Coffee International, with Israel benefiting from productivity and ILS 27 million of insurance income, while Coffee International benefited from volume growth and lower green coffee input costs. He also pointed to a strong balance sheet, with net debt of ILS 2.5 billion and leverage at 1.5x, which he said remains well within target range.

Analysts focused on whether Brazil’s 11.1% Coffee International margin is temporary or sustainable, how competitors are reacting to Arabica price increases, and when the Yoki acquisition will close. Management said the key metric is not the margin itself but maintaining gross profit per kilo; if volumes continue growing and pricing remains disciplined, the absolute profit should keep rising, regardless of short-term margin swings. On Yoki, Strauss said it is still waiting for Brazilian antitrust approval and hopes to close in Q3. Questions also pressed on Haier Strauss Water’s weaker profitability in China; management blamed intense competition, said the business is investing through discounts and product launches rather than additional CapEx, and suggested profit recovery in China could take until mid-2027 to late 2027.