G. Willi-Food reports net income of $2.3 million for fourth quarter 2010

G. Willi-Food reports net income of $2.3 million for fourth quarter 2010

G. Willi-Food International Ltd. announced its audited financial results for the fourth quarter and the fiscal year ending December 31, 2010 with net income of US$ 2.3 Million.

- 2010 Q4 Sales 14.2% Over 2009 Q4 Sales;

- 2010 Q4 Operating Income up 28.7% Over 2009 Q4 Operating Income

G. Willi-Food International Ltd. (NASDAQ:WILCNews) (the "Company" or "Willi-Food"), a global company specializing in the development, manufacturing, marketing and international distribution of kosher foods, announced its audited financial results for the fourth quarter and the fiscal year ending December 31, 2010.

Fourth Quarter Fiscal 2010 Highlights

- Sales increased 14.2% over fourth quarter of 2009 to NIS 91.1 million (US$ 25.7 million)

- Gross profit of NIS 25.4 million (US$ 7.1 million), or 27.9% of sales

- Operating income increased 28.7% over fourth quarter of 2009 to NIS 7.9 million (US$ 2.2 million), or 8.7% of sales

- Income from continuing operations increased 26.1% over fourth quarter of 2009 to NIS 8.1 million (US$ 2.3 million), or 8.9% of sales

- Net income increased 1.2% over fourth quarter of 2009 to NIS 8.1 million (US$ 2.3 million), or 8.9% of sales

- Cash and securities balance of NIS 181.5 million (US$ 51.1 million) as of December 31, 2010

Year End Fiscal 2010 Highlights

- Sales increased 14.8% year-over-year to NIS 348.4 million (US$ 98.2 million), the highest annual sales in the history of the Company

- Gross profit for 2010 increased 20.1% year-over-year to NIS 100.8 million (US$ 28.4 million)

- Gross margin improved to 28.9% compared to 27.6% in 2009, the highest annual gross margin in the history of the Company

- Non-GAAP operating income increased 20.2% year-over-year to NIS 33.6 million (US$ 9.5 million), or 9.6% of sales

- Non-GAAP income from continuing operations increased 20.4% year-over-year to NIS 29.3 million (US$ 8.3 million), or 8.4% of sales

- Non-GAAP net income increased 14.7% year-over-year to NIS 30.2 million (US$ 8.5 million), or 8.7% of sales

Willi-Food's operating divisions include Willi-Food, a distributor of a broad variety of kosher foods; it’s wholly owned Gold Frost—a designer, developer and distributor of branded kosher dairy food products, and Shamir Salads—an Israeli distributor and manufacturer of Mediterranean style salads.

Fourth Quarter Fiscal 2010 Summary

Sales for the fourth quarter of 2010 increased by 14.2% to NIS 91.1 million (US$ 25.7 million) compared to sales of NIS 79.8 million (US$ 22.5 million) in the fourth quarter of 2009. The growth in sales in the fourth quarter was primarily due to the introduction of new products and the impact of a national media campaign that increased awareness of the Willi-Food brand throughout Israel and increased sales and promotional activities.

Gross profit for the fourth quarter of 2010 increased by 4.8% to NIS 25.4 million (US$ 7.1 million) compared to gross profit of NIS 24.2 million (US$ 6.8 million) in the fourth quarter of 2009. Fourth quarter gross margin was 27.9% compared to gross margin of 30.3% for the same period in 2009. The Company is mitigating the effects of worldwide inflation in agricultural commodities and dairy products by working closely with suppliers to anticipate adverse price trends, building inventory accordingly and raising prices to its customers.

Willi-Food's operating income for the fourth quarter of 2010 increased 28.7% to NIS 7.9 million (US$ 2.2 million) over the fourth quarter of 2009. Selling expenses decreased by 2.3% from the comparable quarter of 2009. Selling expenses as a percentage of sales decreased in the fourth quarter of 2010 to 13.5% compared to 15.7% in the fourth quarter of 2009 primarily due to aggressive expense reduction initiatives. General and administrative expenses decreased by 5.7% from the comparable quarter of 2009. General and administrative expenses as a percentage of sales decreased in the fourth quarter of 2010 to 5.7% from 6.9% in the fourth quarter of 2009.

Willi-Food's income before taxes for the fourth quarter of 2010 increased 42.0% to NIS 9.8 million (US$ 2.8 million) over the fourth quarter of 2009. Income from continuing operations for the fourth quarter of 2010 increased 26.1% to NIS 8.1 million (US$ 2.3 million) over the fourth quarter of 2009.

Willi-Food's net income in the fourth quarter of 2010 increased 1.2% to NIS 8.1 million (US$ 2.3 million) from NIS 8.0 million (US$ (2.2 million) recorded in the fourth quarter of 2009. Willi-Food's net income related to Company Shareholders in the fourth quarter of 2010 was NIS 7.4 million (US$ 2.1 million), or NIS 0.55 (US$ 0.15) per share, compared to NIS 7.8 million (US$ 2.2 million), or NIS 0.76 (US$ 0.21) per share, recorded in the fourth quarter of 2009.

Willi-Food generated NIS 4.7 million (US $1.3 million), or NIS 0.35 (US $0.10) per share from continuing operating activities in the fourth quarter of 2010 compared to net cash used in continuing operating activities of NIS 9.3 million (US$ 2.6 million), or NIS 0.72 (US$ 0.20) per share, recorded in the fourth quarter of 2009.

Willi-Food ended the fourth quarter of 2010 with NIS 181.5 million in cash and securities (US$ 51.1 million) and NIS 2.9 million (US$ 0.8 million) in short-term debt (51% of the debt of Shamir Salads). Willi-Food's shareholders' equity at the end of 2010 was NIS 306.9 million (US$ 86.5 million).

Fiscal 2010 Summary

Sales for fiscal 2010 increased 14.8% to NIS 348.4 million (US$ 98.2 million) compared to sales of NIS 303.5 million (US$ 85.5 million) in fiscal 2009. Gross profit for fiscal 2009 increased by 20.1% to NIS 100.8 million (US$ 28.4 million) compared to gross profit of NIS 83.9 million (US$ 23.6 million) in fiscal 2009. Gross margin in 2009 improved to 28.9% compared to gross margin of 27.6% in 2009—the highest annual gross margin in the history of Willi-Food.

All following non-GAAP calculations exclude an unrealized one-time capital gain resulting from the completion of a tender offer for Gold Frost's shares that was recorded as "Other income" in the third quarter of 2009 in the amount of NIS 5.2 million (US$ 1.5 million) (the "Capital Gain"). Non-GAAP operating income for fiscal 2010 increased 20.2% to NIS 33.6 million (US$ 9.5 million) over fiscal 2009. On a GAAP basis (without excluding the Capital Gain), operating income for fiscal 2010 increased 1.2% from NIS 33.2 million (US$ 9.3 million) recorded in fiscal 2009.

Non-GAAP net income for fiscal 2010 increased 14.7% to NIS 30.2 million (US$ 8.5 million) over fiscal 2009. Non-GAAP net income attributable to Company Shareholders for fiscal 2010 increased 11.9% to NIS 28.2 million (US$ 7.9 million), or NIS 2.2 (US$ 0.62) per share, compared to NIS 25.1 million (US$ 7.1 million), or NIS 2.4 (US$ 0.69) per share, recorded in fiscal 2009.

On a GAAP basis, net income fiscal 2010 decreased 4.3% from NIS 31.5 million (US$ 8.9 million) recorded in fiscal 2009. GAAP net income attributable to Company Shareholders for fiscal 2010 decreased 7.4% from NIS 30.4 million (US$ 8.6 million), or NIS 3.0 (US$ 0.83) per share, recorded in fiscal 2009.

Outlook

Mr. Zwi Williger, President and COO of Willi-Food commented: "Fiscal 2010 was a very strong year for Willi Food. For six consecutive quarters, we have grown sales and gross profits while controlling SG&A expense growth. Fourth quarter operating income grew nearly 30%, despite the well-known pressures in commodity costs being felt around the world. Throughout 2010 we introduced great-tasting, higher margin food products, which we develop together with our suppliers. For instance, we recently introduced two new lines of kosher Swiss premium products: our 'KAMBLY' fine biscuit and cookie products, and a new line of fine chocolate bar products. These lines build upon categories that we introduced only a few months ago, such as 'GELATO' kosher Italian ice-cream products, and other chilled desserts.

"Looking forward, we are confident that we can deliver sales and profit growth in 2011. We believe that momentum will continue to build in recently introduced products, and several new product line introductions can further boost sales. The first quarter of 2011 is off to a good start, and the shift of Passover to the second quarter will help drive sales in that period. We are understandably cautious regarding ongoing global commodity price inflation, but are well-positioned to limit any impacts. We will sustain our flexible purchasing strategy, and are highly focused on reducing production costs and SG&A expenses."

"We believe that we can continue to benefit from a multi-channel approach and broad kosher product base that addresses a trend toward more health-conscious food choices. We intend to expand our reach to retail and wholesale markets in the U.S., and have previously discussed the potential for a distribution acquisition in the United States. In addition, several other strategic options are under active evaluation."

Conference Call

A replay of the conference call will be available for 14 days from 2:00 PM EST on March 21, 2011 through 11:59 PM EST on April 4, 2011 by dialing 1-877-870-5176 (US), or 1-858-384-5517 (International), access code 4423592. In addition, a recording of the call will be available via the http://viavid.net/dce.aspx?sid=000082CE link shown for one year.

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