G. Willi-Food International Reports 71.3% increase in operat

|Aug 3|magazine43 min read

YAVNE, Israel, Aug. 3, 2020 /PRNewswire/ -- G. Willi-Food International Ltd. (NASDAQ: WILC) (the "Company" or "Willi-Food"), a global company that specializes in the development, marketing and international distribution of kosher foods, today announced its unaudited financial results for the second quarter ended June 30, 2020.

Second Quarter Fiscal Year 2020 Highlights

  • Sales increased by 4% year-over-year to NIS 104.2 million (US$ 30.1 million).
  • Gross profit increased by 32.4% year-over-year to NIS 39.5 million (US$ 11.4 million).
  • Operating profit of NIS 16.9 million (US$ 4.9 million), or 16.2% of sales, which represents a 71.3% increase from NIS 9.9 million (US$ 2.9 million) in the comparable quarter of 2019.
  • Net profit increased by 34.1% year-over-year to NIS 15.2 million (US$ 4.4 million), or 14.6% of sales.
  • Net cash from operating activities of NIS 23.8 million (US$ 6.9 million).
  • Cash and securities balance of NIS 282.2 million (US$ 81.4 million) as of June 30, 2020.
  • Earnings per share of NIS 1.15 (US$ 0.33).

Management Comment

Zwi Williger & Joseph Williger, Co-Chairmen of Willi-Food, commented: "We are pleased to present strong second quarter 2020 financial results, which show stable growth in Company sales and a significant improvement with all operational profit parameters. Since COVID-19 surfaced in China at the end of 2019 and reached many other countries worldwide, including Israel, there has been a substantial increase in demand for the Company's products. This demand was especially strong in the first quarter of 2020, which led to a general decline in consumption in the second quarter of 2020. Despite this decline, the Company managed to deliver a great performance with higher sales in the second quarter compared to the second quarter in 2019. In parallel with this development, the Company added new and profitable products to its product portfolio to generate higher gross profit margin. As a result, the Company reported a 71.3% increase in operating profit, 41% increase in profit before taxes on income and 34.1% increase in net profit in the second quarter of 2020 compared to the second quarter of 2019.  We intend to maintain sufficient inventory levels and work to further strengthen the Company's supply chain and product portfolio in the future in order to continue to improve our results."

According to retail data analytics provided by StoreNext Ltd1, the Company recorded growth of 30.7% in the first half of 2020 for "sale out" sales (in other words, sales to the final consumer) compared to an 8.7% average increase for the food and beverage industry as a whole.

Second Quarter Fiscal 2020 Summary

Sales for the second quarter of 2020 increased by 4% to NIS 104.2 million (US$ 30.1 million) from NIS 100.1 million (US$ 28.9 million) recorded in the second quarter of 2019. Revenues increased primarily due to a redirection of resources in favor of sales, increasing the variety of the Company's products and improved inventory management.

Gross profit for the second quarter of 2020 increased by 32.4% to NIS 39.5 million (US$ 11.4 million) compared to NIS 29.8 million (US$ 8.6 million) recorded in the second quarter of 2019. Second quarter gross margin increased by 27.2% to 37.9% compared to gross margin of 29.8% for the same period in 2019. The increase in gross profit was primarily due to the increase in sales and the increase in gross margin resulted from the Company's strategy of selling a more favorable mix of products which generate a higher gross margin and credits received from suppliers during the second quarter of 2020.

Selling expenses increased by 9.8% to NIS 16.2 million (US$ 4.7 million) compared to NIS 14.8 million (US$ 4.3 million) in the second quarter of 2019 primarily due to an increase in payroll expenses in the logistics department as a result of working in two shifts to comply with government workplace restrictions due to the COVID-19 pandemic, and an increase of freight to customers' expenses to support sales growth.

General and administrative expenses increased by 24% to NIS 6.5 million (US$ 1.9 million) compared to NIS 5.2 million (US$ 1.5 million) in the second quarter of 2019. The increase in general and administrative expenses was primarily due to an increase in payroll expenses.

As a result of the foregoing, operating profit for the second quarter of 2020 increased by 71.3% to NIS 16.9 million (US$ 4.9 million) compared to NIS 9.9 million (US$ 2.8 million) in the second quarter of 2019.

Finance income, net totaled NIS 3.3 million (USD$ 1.0 million) compared to Finance income, net of NIS 4.5 million (US$ 1.3 million) in the second quarter of 2019. The decrease in Finance income, net was primarily due to a decrease in interest income and dividends received from the Company's securities portfolio and from revaluation of the Company's securities portfolio to its fair value.

At the beginning of the year as a result of the COVID-19 pandemic, capital markets recorded sharp declines and, as a result, the Company suffered a decline in the value of its portfolio of securities in the first quarter of 2020. Since that time, capital markets have recovered somewhat and as a result the Company recorded gains from revaluation of its portfolio of securities of approximately NIS 2.5 million (USD$ 0.7 million) in the second quarter of 2020.

Income before taxes on income for the second quarter of 2020 was NIS 20.2 million (US$ 5.8 million) compared to income before taxes on income of NIS 14.3 million (US$ 4.1 million) in the second quarter of 2019.

Net profit in the second quarter of 2020 was NIS 15.2 million (US$ 4.4 million), or NIS 1.15 (US$ 0.33) per share, compared to NIS 11.3 million (US$ 3.3 million), or NIS 0.86 (US$ 0.25) per share, recorded in the second quarter of 2019.

Willi-Food ended the second quarter of 2020 with NIS 282.2 million (US$ 81.4 million) in cash and securities. Net cash from operating activities for the second quarter of 2020 was NIS 23.8 million (US$ 6.9 million). Willi-Food's shareholders' equity at the end of June 2020 was NIS 507.8 million (US$ 146.5 million).

First Half Fiscal 2020 Highlights

  • Sales increased by 17.8% year-over-year to NIS 233.3 million (US$ 67.3 million).
  • Gross profit increased by 35.0% year-over-year to NIS 81.0 million (US$ 23.4 million).
  • Operating profit increased by 59.8% year-over-year to NIS 35.9 million (US$ 10.4 million), or 15.4% of sales.
  • Net profit decreased by 39.5% to NIS 16.4 million (US$ 4.7 million), or 7% of sales.
  • Net cash from operating activities of NIS 31.8 million (US$ 9.2 million).
  • Earnings per share of NIS 1.24 (US$ 0.36).

First Half Fiscal 2020 Summary

Willi-Food's sales for the six-month period ending June 30, 2020 increased by 17.8% to NIS 233.3 million (US$ 67.3 million) compared to sales of NIS 198.0 million (US$ 57.1 million) in the first half of 2019. Sales increased in the first half of 2020 primarily due to the COVID-19 pandemic, which led to an increase in demand for the Company's products, primarily in retail chains, and due to a redirection of resources in favor of sales, increasing the variety of the Company's products and improved inventory management.

Gross profit for the period increased by 35.0% to NIS 81.0 million (US$ 23.4 million) compared to gross profit of NIS 60.0 million (US$ 17.3 million) for the first half of 2019. First half 2020 gross margin was 34.7% compared to a gross margin of 30.3% for the same period in 2019. The increase in gross profit was primarily due to the increase in sales and an increase in gross margin resulting from the Company's strategy of selling a more favorable mix of products which generate a higher gross margin and credits received from suppliers.

Operating profit for the first half of 2020 increased by 59.8% to NIS 35.9 million (US$ 10.4 million) from NIS 22.5 million (US$ 6.5 million) reported in the comparable period of last year primarily due to the increase of gross profit.

Income before taxes for the first half of 2020 decreased by 36.1% to NIS 21.8 million (US$ 6.3 million) compared to NIS 34.2 million (US$ 9.9 million) recorded in the first half of 2019.

Net profit for the first half of 2020 decreased by 39.5% to NIS 16.4 million (US$ 4.7 million), or NIS 1.24 (US$ 0.36) per share, from NIS 27.1 million (US$ 7.8 million), or NIS 2.05 (US$ 0.59) per share, recorded in the first half of 2019.

Note regarding conference call

As previously announced, the Company will host a conference call on Thursday, August 4, 2020 at 8:30 am Eastern Time to discuss the Company's financial results for the second quarter of 2020. 

To participate in the conference call, please call one of the following teleconferencing numbers. Please begin placing your calls at least 10 minutes before the conference call commences.

Israel:                   03-9180644
USA:                   1-888-281-1167  
International:       +972-3-9180644

When: 8:30 a.m. Eastern Time (3:30 p.m. Israel Time).

NOTE A: NIS to US$ exchange rate used for convenience only

The convenience translation of New Israeli Shekels (NIS) into U.S. dollars was made at the rate of exchange prevailing on June 30, 2020, U.S. $1.00 equals NIS 3.466. The translation was made solely for the convenience of the reader.

NOTE B: IFRS

The Company's consolidated financial results for the three-month and six-month period ended June 30, 2020 are presented in accordance with International Financial Reporting Standards ("IFRS").

About G. Willi-Food International Ltd.

G. Willi-Food International Ltd. (http://www.willi-food.com) is an Israeli-based company specializing in high-quality, great-tasting kosher food products. Willi-Food is engaged directly and through its subsidiaries in the design, import, marketing and distribution of over 600 food products worldwide. As one of Israel's leading food importers, Willi-Food markets and sells its food products to over 1,250 customers and 2,500 selling points in Israel and around the world including large retail and private supermarket chains, wholesalers and institutional consumers. The Company's operating divisions include Willi-Food in Israel and Gold Frost, a wholly owned subsidiary who designs, develops and distributes branded kosher, dairy-food products.

FORWARD LOOKING STATEMENT

This press release contains forward-looking statements within the meaning of safe harbor provisions of the Private Securities Litigation Reform Act of 1995 relating to future events or our future performance, such as statements regarding trends, demand for our products and expected sales, operating results, and earnings. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in those forward-looking statements. These risks and other factors include but are not limited to: monetary risks including changes in marketable securities or changes in currency exchange rates- especially the NIS/U.S. Dollar exchange rate, payment default by any of our major clients, the loss of one of more of our key personnel, changes in laws and regulations, including those relating to the food distribution industry, and inability to meet and maintain regulatory qualifications and approvals for our products, termination of arrangements with our suppliers, loss of one or more of our principal clients, increase or decrease in global purchase prices of food products, increasing levels of competition in Israel and other markets in which we do business, changes in economic conditions in Israel, including in particular economic conditions in the Company's core markets, our inability to accurately predict consumption of our products and changes in consumer preferences, our inability to protect our intellectual property rights, our inability to successfully integrate our recent acquisitions, insurance coverage not sufficient enough to cover losses of product liability claims, risks associated with product liability claims and risks associated with the start of credit extension activity. We cannot guarantee future results, levels of activity, performance or achievements. The matters discussed in this press release also involve risks and uncertainties summarized under the heading "Risk Factors" in the Company's Annual Report on Form 20-F for the year ended December 31, 2019, filed with the Securities and Exchange Commission on March 19, 2020. These factors are updated from time to time through the filing of reports and registration statements with the Securities and Exchange Commission. We do not assume any obligation to update the forward-looking information contained in this press release.


 

G. WILLI-FOOD INTERNATIONAL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS



June 30,

December 31

June 30,

December 31



2 0 2 0

2 0 1 9

2 0 1 9

2 0 2 0

2 0 1 9

2 0 1 9



NIS

US dollars (*)



(in thousands)


ASSETS














Current assets







Cash and cash equivalents

168,689

129,889

121,860

48,670

37,475

35,159

Financial assets carried at fair value
through profit or loss

113,468

137,980

141,543

32,737

39,810

40,838

Trade receivables

140,581

120,456

133,039

40,560

34,753

38,384

Loans to others

3,650

15,831

17,650

1,053

4,568

5,092

Other receivables and prepaid expenses

6,516

5,359

9,360

1,880

1,546

2,700

Inventories

61,262

55,871

71,548

17,675

16,120

20,643

Total current assets

494,166

465,386

495,000

142,575

134,272

142,816








Non-current assets







Property, plant and equipment

82,138

80,198

81,402

23,698

23,138

23,486

Less -Accumulated depreciation

45,723

42,042

43,881

13,192

12,130

12,660


36,415

38,156

37,521

10,506

11,008

10,826








Right of use asset

3,382

1,961

3,860

976

566

1,114

Financial assets carried at fair value
through profit or loss

9,273

-

 

-

2,675

-

 

-

Goodwill

36

36

36

10

10

10

Deferred taxes

4,200

1,337

818

1,212

386

236

Total non-current assets

53,306

41,490

42,235

15,379

11,970

12,186









547,472

506,876

537,235

157,954

146,242

155,001

EQUITY AND LIABILITIES














Current liabilities







Current maturities of lease liabilities

1,593

1,027

1,675

460

296

483

Current tax liabilities

1,448

3,755

3,750

417

1,083

1,082

Trade payables

20,049

24,168

24,650

5,784

6,973

7,112

Employees Benefits

3,410

2,952

2,911

984

852

840

Other payables and accrued expenses

9,728

5,738

9,195

2,808

1,656

2,653

Total current liabilities

36,228

37,640

42,181

10,453

10,860

12,170








Non-current liabilities







Lease liabilities

1,896

946

2,212

547

273

638

Retirement benefit obligation

1,596

924

1,486

460

267

429

Total non-current liabilities

3,492

1,870

3,698

1,007

540

1,067

Shareholders' equity 







Share capital NIS 0.1 par value (authorized -

50,000,000 shares, issued and outstanding -
13,217,017 shares at
June 30, 2020; and December 31, 2019)

1,425

1,425

1,425

411

411

411

Additional paid in capital

128,354

128,354

128,354

37,032

37,032

37,032

Capital fund

247

247

247

71

71

71

Treasury shares

(628)

(625)

(628)

(181)

(180)

(181)

Remeasurement of the net liability in
respect of defined benefit

(1,029)

(623)

(1,029)

(297)

(180)

(297)

Retained earnings

379,383

338,588

362,987

109,458

97,688

104,728

Equity attributable to owners of the
Company

507,752

467,366

491,356

146,494

134,842

141,764









547,472

506,876

537,235

157,954

146,242

155,001

(*)        Convenience translation into U.S. dollars.

 

 

 

G. WILLI-FOOD INTERNATIONAL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



Six months

Three months

Six months


ended

ended

ended


June 30,

June 30,

June 30,


2 0 20

2 0 1 9

2 0 20

2 0 1 9

2 0 20

2 0 1 9


NIS

US dollars (*)


In thousands (except per share and share data)








Sales

233,255

197,934

104,152

100,099

67,298

57,107

Cost of sales

152,232

137,908

64,651

70,270

43,922

39,789








Gross profit

81,023

60,026

39,501

29,829

23,376

17,319








Operating costs and expenses:







Selling expenses

32,822

27,224

16,205

14,758

9,470

7,855

General and administrative expenses

12,340

10,331

6,464

5,213

3,560

2,981

Other income

58

-

58

-

17

-















Total operating expenses

45,104

37,555

22,611

19,971

13,013

10,835








Operating profit

35,919

22,471

16,890

9,858

10,363

6,483








Financial income

2,580

12,993

3,743

4,847

744

3,749

Financial expense

16,677

1,290

404

356

4,811

372








Total financial income (expense)

(14,097)

11,703

3,339

4,491

(4,067)

3,377















Income before taxes on income

21,822

34,174

20,229

14,349

6,296

9,860

Taxes on income

(5,425)

(7,062)

(5,015)

(3,002)

(1,565)

(2,038)








Profit for the period

16,397

27,112

15,214

11,347

4,731

7,822








Earnings per share:







Basic/diluted earnings per share

1.24

2.05

1.15

0.86

0.36

0.59








Shares used in computation of
basic EPS

13,217,017

13,217,017

13,217,017

13,217,017

13,217,017

13,217,017

(*)        Convenience translation into U.S. dollars.

 

 

 

G. WILLI-FOOD INTERNATIONAL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



Six months

Three months

Six months


ended

ended

ended


June 30,

June 30,

June 30,


2 0 20

2 0 1 9

2 0 20

2 0 1 9

2 0 20

2 0 1 9


NIS

US dollars (*)


(in thousands)








CASH FLOWS - OPERATING ACTIVITIES







Profit from continuing operations

16,397

27,112

15,214

11,347

4,731

7,822

Adjustments to reconcile net profit to net cash used to
(used in) continuing operating activities (Appendix A)

15,410

(24,185)

8,627

(8,953)

4,446

(6,978)








Net cash used in continuing operating activities

31,807

2,927

23,841

2,394

9,177

844















CASH FLOWS - INVESTING ACTIVITIES







Acquisition of property plant and equipment

(736)

(586)

(374)

(375)

(212)

(169)

Proceeds from sale of marketable securities, net

2,528

10,190

10,528

7,196

729

2,940

Proceeds from sale of property plant and equipment

58

-

58

-

17

-

Loans granted to others

-

(21,650)

-

(3,650)

-

(6,246)

Proceeds from loans granted to others

14,000

5,819

14,000

5,942

4,039

1,679








Net cash used in (used to) continuing investing
activities

15,850

(6,227)

 

24,212

 

9,113

4,573

(1,796)















CASH FLOWS - FINANCING ACTIVITIES







Lease liability payments

(828)

(473)

(404)

(259)

(239)

(137)

Acquisition of treasury shares

-

(625)

-

-

-

(180)








Net cash used in continuing financing activities

(828)

(1,098)

(404)

(259)

(239)

(317)















Increase (decrease) in cash and cash equivalents

46,829

(4,398)

47,649

11,248

13,511

(1,269)








Cash and cash equivalents at the beginning of the
financial period

121,860

134,287

121,040

118,641

35,159

38,744








Cash and cash equivalents of the end of the
financial year

168,689

129,889

168,689

129,889

48,670

37,475

(*)        Convenience Translation into U.S. Dollars.

 

 

 

G. WILLI-FOOD INTERNATIONAL LTD.

APPENDIX TO CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


CASH FLOWS - OPERATING ACTIVITIES:

A.         Adjustments to reconcile net profit to net cash from operating activities:



Six months

Three months

Six months


ended

ended

ended


June 30,

June 30,

June 30,


2 0 20

2 0 1 9

2 0 20

2 0 1 9

2 0 20

2 0 1 9


NIS

US dollars (*)


(in thousands)















Decrease (increase) in deferred income taxes

(3,382)

1,546

901

505

(976)

446

Unrealized loss (gain) on marketable securities

16,272

(10,266)

(2,433)

(3,282)

4,695

(2,962)

Depreciation and amortization

2,751

2,308

1,398

1,167

794

666

Capital gain on disposal of property plant and
equipment

(58)

-

(58)

-

(17)

-








Changes in assets and liabilities:







Increase (decrease) in trade receivables and other receivables

(4,700)

(23,194)

19,991

(7,526)

(1,356)

(6,692)

Decrease (increase) in inventories

10,286

(6,582)

(5,271)

(4,764)

2,968

(1,899)

Increase (decrease) in trade and other payables,
and other current liabilities

(5,759)

12,003

(5,901)

4,947

(1,662)

3,463









15,410

(24,185)

8,627

(8,953)

4,446

(6,978)

 

B.         Significant non-cash transactions:


Six months

Three months

Six months


ended

ended

ended


June 30,

June 30,

June 30,


2 0 20

2 0 1 9

2 0 20

2 0 1 9

2 0 20

2 0 1 9


NIS

US dollars (*)


(in thousands)








Supplemental cash flow information:







Income tax paid

11,060

4,545

4,580

4,545

3,191

1,311

(*)        Convenience Translation into U.S. Dollars.

 

This information is intended to be reviewed in conjunction with the Company's filings with the Securities and Exchange Commission.

 

Company Contact:
G. Willi - Food International Ltd.
Yitschak Barabi, Chief Financial Officer
(+972) 8-932-1000
[email protected]

[1] StoreNext Ltd. has a direct connection to the cash register systems of over 2,200 points of sales, providing information regarding 80% of real time sales data in Israel.

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