PR Newswire | Aug 3, 2020 08:35AM EDT

increase in profit before taxes on income and 34.1% increase in net profit in second quarter 2020 compared to same period 2019

08/03 07:35 CDT

G. Willi-Food International Reports 71.3% increase in operating profit, 41.0% increase in profit before taxes on income and 34.1% increase in net profit in second quarter 2020 compared to same period 2019 YAVNE, Israel, Aug. 3, 2020

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 a71.3% 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: 03-9180644USA: 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 June 30, December 31 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 atfair value 113,468 137,980 141,543 32,737 39,810 40,838through profit or loss

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 6,516 5,359 9,360 1,880 1,546 2,700prepaid expenses

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 82,138 80,198 81,402 23,698 23,138 23,486equipment

Less -Accumulated 45,723 42,042 43,881 13,192 12,130 12,660depreciation

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 9,273 - 2,675 -through profit or loss - -

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 1,593 1,027 1,675 460 296 483liabilities

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 9,728 5,738 9,195 2,808 1,656 2,653expenses

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 1,596 924 1,486 460 267 429obligation

Total non-current 3,492 1,870 3,698 1,007 540 1,067liabilities

Shareholders' equity

Share capital NIS 0.1 parvalue (authorized -

50,000,000 shares, issued 1,425 1,425 1,425 411 411 411and outstanding -13,217,017 shares atJune 30, 2020; and December31, 2019)

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 netliability in (1,029) (623) (1,029) (297) (180) (297)respect of defined benefit

Retained earnings 379,383 338,588 362,987 109,458 97,688 104,728

Equity attributable toowners of the 507,752 467,366 491,356 146,494 134,842 141,764Company

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

Operatingcosts andexpenses:

Selling 32,822 27,224 16,205 14,758 9,470 7,855expenses

General andadministrative 12,340 10,331 6,464 5,213 3,560 2,981expenses

Other income 58 - 58 - 17 -

Totaloperating 45,104 37,555 22,611 19,971 13,013 10,835expenses

Operating 35,919 22,471 16,890 9,858 10,363 6,483profit

Financial 2,580 12,993 3,743 4,847 744 3,749income

Financial 16,677 1,290 404 356 4,811 372expense

Totalfinancial (14,097) 11,703 3,339 4,491 (4,067) 3,377income(expense)

Income beforetaxes on 21,822 34,174 20,229 14,349 6,296 9,860income

Taxes on (5,425) (7,062) (5,015) (3,002) (1,565) (2,038)income

Profit for the 16,397 27,112 15,214 11,347 4,731 7,822period

Earnings pershare:

Basic/dilutedearnings per 1.24 2.05 1.15 0.86 0.36 0.59share

Shares used incomputation of 13,217,017 13,217,017 13,217,017 13,217,017 13,217,017 13,217,017basic EPS

(*) 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 - OPERATINGACTIVITIES

Profit from continuing 16,397 27,112 15,214 11,347 4,731 7,822operations

Adjustments to reconcile netprofit to net cash used to 15,410 (24,185) 8,627 (8,953) 4,446 (6,978)(used in) continuing operatingactivities (Appendix A)

Net cash used in continuing 31,807 2,927 23,841 2,394 9,177 844operating activities

CASH FLOWS - INVESTINGACTIVITIES

Acquisition of property plant (736) (586) (374) (375) (212) (169)and equipment

Proceeds from sale of 2,528 10,190 10,528 7,196 729 2,940marketable securities, net

Proceeds from sale of property 58 - 58 - 17 -plant and equipment

Loans granted to others - (21,650) - (3,650) - (6,246)

Proceeds from loans granted to 14,000 5,819 14,000 5,942 4,039 1,679others

Net cash used in (used to) continuing investing 15,850 (6,227) 4,573 (1,796)activities 24,212 9,113

CASH FLOWS - FINANCINGACTIVITIES

Lease liability payments (828) (473) (404) (259) (239) (137)

Acquisition of treasury shares - (625) - - - (180)

Net cash used in continuing (828) (1,098) (404) (259) (239) (317)financing activities

Increase (decrease) in cash and 46,829 (4,398) 47,649 11,248 13,511 (1,269)cash equivalents

Cash and cash equivalents atthe beginning of the 121,860 134,287 121,040 118,641 35,159 38,744financial period

Cash and cash equivalents ofthe end of the 168,689 129,889 168,689 129,889 48,670 37,475financial year

(*) 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 operatingactivities:

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 (3,382) 1,546 901 505 (976) 446deferred income taxes

Unrealized loss (gain) on 16,272 (10,266) (2,433) (3,282) 4,695 (2,962)marketable securities

Depreciation and amortization 2,751 2,308 1,398 1,167 794 666

Capital gain on disposal ofproperty plant and (58) - (58) - (17) -equipment

Changes in assets andliabilities:

Increase (decrease) in tradereceivables and other (4,700) (23,194) 19,991 (7,526) (1,356) (6,692)receivables

Decrease (increase) in 10,286 (6,582) (5,271) (4,764) 2,968 (1,899)inventories

Increase (decrease) in tradeand other payables, (5,759) 12,003 (5,901) 4,947 (1,662) 3,463and other current liabilities

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 flowinformation:

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) 8-932-1000itsik.b@willi-food.co.il

[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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