Israel-listed food and beverage conglomerate Strauss Group (TASE: STRS) reported a sharp acceleration in second-quarter profitability, with operating income rising 41.9% to NIS 363 million and net profit attributable to shareholders more than doubling to NIS 195 million from NIS 90 million in the year-prior period. Group revenues came in at NIS 2,867 million, down 6.7% in reported terms but only 1.9% lower on a like-for-like basis after stripping out shekel appreciation against key trading currencies.

The Numbers

The operating margin expansion — from 8.3% to 12.6% — was driven by a gross profit jump of 13.6% to NIS 986 million, lifting the gross margin to 34.4% from 28.3%. Excluding a one-time NIS 27 million insurance payment recorded in the quarter, adjusted EBIT reached NIS 336 million at an 11.7% margin, still a material step-up from the prior year. EBITDA rose 31.7% to NIS 472 million, with the EBITDA margin widening to 16.4% from 11.7%. Free cash flow swung decisively positive to NIS 150 million versus negative NIS 89 million a year ago, and the net debt-to-EBITDA ratio improved to 1.5 times from 2.4 times. The board declared a semi-annual dividend of NIS 180 million, or approximately NIS 1.54 per share, payable September 3, 2026. For the first half, EBIT advanced 52.9% to NIS 679 million on revenues of NIS 5,868 million, broadly flat in like-for-like terms, while net profit surged 119.3% to NIS 376 million.

Segment Drivers

The Strauss Israel division — spanning the company's domestic health-and-wellness dairy and fresh foods lines as well as its snacks, confectionery, and coffee retail operations — contributed Q2 EBIT of NIS 198 million, a 46.0% increase, on revenues of NIS 1,300 million. The Fun & Indulgence snacks and confectionery sub-segment was a standout: Q2 EBIT reached NIS 52 million, against near-breakeven a year ago, as the prior period had been weighed down by a NIS 49 million cocoa-derivative loss. H1 snacks EBIT swung to NIS 92 million from negative NIS 15 million. Coffee International, which consolidates Strauss's 50% stake in Brazilian joint venture 3corações alongside Central and Eastern European operations in Poland, Romania, Russia, and Ukraine, posted Q2 EBIT of NIS 148 million, up 44.3%, despite a 13.1% revenue decline driven primarily by shekel appreciation and lower green coffee pass-through prices. On a like-for-like basis, Coffee International revenues fell a more modest 3.9%, and the division's EBIT margin nearly doubled to 11.1% from 6.7%. 3corações alone delivered Q2 EBIT of approximately NIS 110 million, up roughly 25.0%, aided by volume growth in the roast-and-ground segment. CEE revenues rose 6.4% on a like-for-like basis in Q2. Strauss Water, the company's connected hydration appliance business, grew Q2 revenues 7.1% to NIS 233 million, though the H1 EBIT declined 13.9% to NIS 45 million due to war-related disruptions in Israel during the first quarter. The 49%-owned Haier Strauss Water joint venture reported Q2 like-for-like revenue growth of 2.6%.

Management Outlook

Shai Babad, President and Chief Executive Officer of Strauss Group, attributed the results to sustained execution across the portfolio. "Even in a complex business environment we have been able to significantly improve profitability, while continuing to invest in our brands, innovation, and capabilities," Babad said, characterising the gains as structural rather than cyclical. Credit-rating agency Midroog affirmed the company's Aa1.il rating with a Stable outlook during the quarter, providing an independent signal of financial resilience. The improvement in leverage — net debt falling to NIS 2,504 million from NIS 2,966 million a year earlier — gives the group additional headroom as it continues to invest in branded consumer goods categories across Israel, Brazil, and Central and Eastern Europe. Operators and retail buyers tracking the global coffee supply chain will note that shekel-driven FX headwinds masked underlying volume momentum at 3corações, a dynamic that could reverse should the currency rebalance. Similarly, the normalisation of cocoa derivative costs positions the snacks and confectionery segment for sustained margin contribution in the second half.

Written by Michael Politz, Author of Guide to Restaurant Success: The Proven Process for Starting Any Restaurant Business From Scratch to Success (ISBN: 978-1-119-66896-1), Founder of Food & Beverage Magazine, the leading online magazine and resource in the industry. Designer of the Bluetooth logo and recognized in Entrepreneur Magazine's "Top 40 Under 40" for founding American Wholesale Floral, Politz is also the Co-founder of the Proof Awards and the CPG Awards and a partner in numerous consumer brands across the food and beverage sector.