Strauss Group Reports Solid Start to 2009 with Growth in Sales and Pro-forma Net Profit

TEL AVIV - Financial highlights: - Sales in Q1 totaled NIS 1.52 billion, an increase of 1.2%; Organic growth, net of exchange rate impacts, totaled 6.3%. - Q1 reported operating profit reached NIS 135 million, compared to NIS 125 million in the same quarter last year; Operating profit for Q1, on a pro-forma[1] basis, totaled NIS 135 million compared to NIS 137 million last year. - Q1 reported net profit totaled NIS 74 million, compared to NIS 84 million in Q1 2008; Net profit, on a pro-forma basis, reached NIS 80 million compared to NIS 65 million last year.

(Logo:

The Strauss Group (TASE: STRS) today reported its results for the first quarter of 2009.

Ofra Strauss, Chairperson of Strauss Group, said today, “Strauss showed continued sustainability while navigating unprecedented macro challenges. Throughout the quarter we continued to strengthen our core foundations for growth while enhancing our long term standing and sustainability.”

Erez Vigodman, CEO of Strauss Group, said today: “The first quarter results exemplify the Group’s ability to withstand challenges, such as those presented in 2009.”

Gadi Lesin, incoming CEO of Strauss Group, said today, “Strauss Group presented a solid start to the year, with growth in both sales and profits, resulting from the Groups sound foundations, enabling it to meet the challenges posed in 2009. The improvement is notable for all of the Group’s activities in Israel, global coffee and our North-American operations.”

[1] Pro-forma - net of employees options, hedging transactions, inventory and fixed assets write-off and non recurring other income (capital gains) other expenses (capital losses, write offs)

Main Highlights for the First Quarter 2009 (NIS millions): First Quarter 2009 2008 % Chg Sales 1,522 1,504 1.2 Financial accounting gross profit 556 546 1.9 Pro-forma operating profit 135 137 (1.5) Financial accounting operating profit (1) 135 125 8.0 Pro-forma net profit (2) 80 65 22.3 Financial accounting net profit (2) 74 84 (11.5)

(1) Before other income (expenses)

(2) Attributed to the shareholders of the Company

Sales

The Group’s sales in the first quarter increased 1.2%, reaching NIS 1,522 million compared to NIS 1,504 million in the first quarter last year. Sales for the quarter, net of currency fluctuations, grew 7.3% from the first quarter last year. Organic growth, net of currency fluctuations, increased by 6.3%, compared to first quarter 2008.

Results by Business Units

The Israeli Sector - Strauss Israel

Sales of Strauss Israel (including the coffee business in Israel) increased by 2.1%, almost in line with market growth, and totaled NIS 856 million. Sales of the Israeli sector (excluding coffee) totaled NIS 681 million, an increase of 0.1%.

The Company in Israel is investing substantial resources in order to better understand consumer behavior in periods of recession in light of the change in purchasing power. Subsequently the Company is focusing on enhancing the core fundamentals - product quality, service level and pricing management.

During the quarter the Company continued to develop and adapt its brand and product portfolio by creating value offerings relevant, to the consumer and, through innovation in other categories.

Sales for the Fun & Indulgence division increased by 2.2%, the growth in the division is due largely to the successful management of innovation processes during the quarter. Sales for the Health & Wellness division dropped by 1.1%.

Operating profit for the Israel activity increased by 16.0% compared to the first quartet last year. This primarily follows the ongoing efficiency measures and close cost management. This was especially evident in the Fun & Indulgence unit, partially accelerated by the timing of the Passover holiday.

The operating margin of the Israel activities improved to 12.1% in the first quarter 2009, compared to 10.4% in the first quarter last year.

The Coffee Sector

Sales of the Coffee Sector grew by 5.5% and totaled NIS 770 million. Coffee Sector sales, net of the currency fluctuations’ impact, grew 21.5%. Organic growth, net of acquired businesses and currency fluctuations, totaled 11.7%.

The Coffee Sectors’ growth in Israeli Shekel terms was adversely impacted by the sharp fluctuations in the exchange rates of the various operating currencies, paired with the difficulty to raise prices in certain countries, due to the prevalent macroeconomic environment.

In most countries the Coffee Sector witnessed growth in local currencies, the most substantial being in the former USSR based operations (following the acquisition of the coffee brands of Cosant Enterprises Ltd. in the CIS countries) as well as in Israel, Poland and Brazil. The growth in sales was positively influenced by the growth in volumes, organic growth in most countries, mergers and acquisitions as well as by increased sales prices.

Operating income of the Coffee Sector totaled NIS 50 million (6.5% of sales) compared to NIS 64 million (8.8% of sales) last year, a decrease of 22.1%. The decrease in the operating profit is mainly the result of the decrease in the gross profit, higher selling and marketing expenses, and the impact of currency fluctuations.

The Sabra Refrigerated Dips Business in the USA

In the first quarter of 2009 Sabra’s pro-forma sales (assuming the full consolidation of Sabra’s business) totaled NIS 94 million compared to NIS 61 million last year, an increase of 55.1%. Pro-forma growth in the quarter, net of the impact of the strengthening of the Dollar against the Shekel, totaled 38.5%,

Sabra’s pro-forma operating profit (assuming the full consolidation of Sabra’s business) totaled NIS 14 million (14.7% of sales) in the first quarter compared to NIS 5 million last year (8.6%), an increase of 166.9%.

Sabra has continued to grow its market share and to maintain a leading position in the refrigerated flavored spreads category. Sabra’s average market share in the first quarter was 37.4% compared to an average market share of 27.4% in the corresponding quarter last year (according to IRI figures published on March 22, 2009), and 34.2% in the fourth quarter of 2008.

The Max Brenner Business

In the first quarter Max Brenner’s sales totaled NIS 24 million, an increase of 8.6% compared to NIS 22 million last year. Sales in the first quarter, net of the impact of the strengthening of the Dollar against the Shekel, grew by 3.6%.

In the first quarter of 2009, 24 Max Brenner Chocolate Bars were in operation around the world: 6 in Israel, 2 in the US, 2 in the Philippines, 1 in Singapore and 13 in Australia. Seven branches are owned by the Company, and all other branches are operated under franchise.

Consolidated Financial Review:

Sales

The Group’s consolidated sales in the first quarter totaled NIS 1,522 million, an increase of 1.2%, compared to NIS 1,504 million in the corresponding period last year. Sales growth, net of currency fluctuations, amounted to 7.3%. Organic growth in the first quarter, net of currency fluctuations’ impact, amounted to 6.3%.

The Group is countering the changes in raw material prices and exchange rates by streamlining all areas of its activity and by raising product prices.

Gross Profit

Accounting gross margin in the first quarter increased from 36.3% last year, to 36.5% this year, a 1.9% increase. Gross margin for the quarter, net of hedging transactions impact, remained identical to last year.

The gross profit was positively impacted by the growth in sales, by the streamlining measures applied and by the increase in sales prices in some countries. These positive contributors were offset by currency fluctuations, transfer to proportionate consolidation (50%) of Sabra’s activity and the growth in the scale of the coffee business, which ultimately led to a drop in the Group’s gross margin in the first quarter.

Operating Profit

In the first quarter, accounting operating profit (before other expenses) increased 8.0% totaling NIS 135 million (8.8% of sales), compared to NIS 125 million (8.3% of sales) in the corresponding period last year.

Pro-forma operating profit for the quarter totaled NIS 135 million (8.8% of sales) in the first quarter, compared to NIS 137 million (9.1% of sales) last year, a decrease of 1.5%.

The decrease in the Group’s pro-forma operating profit is due mainly to the decrease in the operating profit of the coffee sector. At the same time, in the Israeli sector, there was a considerable improvement of 16.0% in the pro-forma operating profit, which is the result of streamlining the Company’s cost structure and the decrease in the rate of selling expenses and administrative expenses. The lower operating margin is due mainly to the lower gross margin.

Net Income for the Period

In the first quarter, net income for the period amounted to NIS 90 million compared to NIS 93 million last year.

Income for the Period Attributable to Company Shareholders

Net income attributable to Company Shareholders in the first quarter totaled NIS 74 million compared to NIS 84 million last year, a decrease of 11.5%. This decrease is mainly due to the fact that in the corresponding quarter last year, other income included a capital gain of NIS 27.3 million in respect of the transfer from full to proportionate consolidation of Sabra’s activity, as well as an increase in tax expenses in the quarter compared to last year, and an increase in the minority share of the income following the TPG transaction (the acquisition of 25.1% of the shares of Strauss Coffee by TPG Capital).

Pro-forma net income for the period attributable to the Company’s Shareholders totaled NIS 80 million compared to NIS 65 million last year, an increase of 22.3%.

About Strauss Group:

Strauss Group, Israel’s second largest food and beverage conglomerate, has, over the past few years, become an international corporation with a steadily growing part of its business conducted outside of Israel. The Group employs 11,600 people and operates nineteen production sites in eleven countries.

The Group focuses on key consumption trends in the food industry via three business divisions in Israel: Health & Wellness, Fun & Indulgence, and Coffee. The Group continuously expands its business activities outside of Israel, at present primarily through the Coffee Company, which is positioned as one of the world’s ten largest coffee companies, leading markets in Israel, Central and Eastern Europe, and Brazil.

The Group collaborates with a number of leading multinationals - Danone, PepsiCo and Lavazza - and is traded on the Tel Aviv 25 Index.

Table 1

Following are the condensed financial accounting statements of income for the quarters ended March 31, 2009 and 2008 (in NIS millions):

Three Months 2009 2008 % Chg Sales 1,522 1,504 1.2 Cost of sales not including impact of hedging 971 955 1.6 transactions Revaluation of the balance of hedging transactions on commodities as at the end of the period (5) 3 Cost of sales 966 958 0.8 Gross Income 556 546 1.9 Selling and marketing expenses 334 332 0.8 General and administrative expenses 87 89 -2.5 Operating income before other income (expenses) 135 125 8.0 Other income (expenses), net (5) 28 Operating Income 130 153 -15.0 Financing income (expenses), net 4 (25) Income before taxes on income 134 128 5.0 Taxes on income (44) (35) 27.0 Effective tax rate 32.9% 27.2% Income for the period 90 93 -3.2 Income attributed to the shareholders of the Company 74 84 -11.5 Income attributed to the minority interest 16 9 73.9

Table 2

Following are the condensed pro-forma results of business operations (based on the Company’s management accounting statements) for the quarters ended March 31, 2009 and 2008 (in NIS millions):

Three Months 2009 2008 % Chg Sales 1,522 1,504 1.2 Cost of sales 971 953 1.8 Gross Income 551 551 0.0 Selling and marketing expenses 334 332 0.8 General and administrative expenses 82 82 -0.5 Operating income - management accounting 135 137 -1.5 Financing expenses, net 4 (25) Income before taxes on income 139 112 24.2 Taxes on income (44) (37) 19.4 Income for the period - management accounting 95 75 26.6 Income attributed to the shareholders of the Company 80 65 22.3 Income attributed to the minority interest 15 10 55.3

Table 3

Following are the condensed results of business operations (based on the Company’s management accounting statements) of the business sectors for the quarters ended March 31, 2009 and 2008 (in NIS millions):

Three Months 2009 2008 % Chg Israel Net sales 681 680 0.1 Gross income 281 272 3.2 Operating income 82 71 16.0 Coffee Net sales 770 730 5.5 Gross income 230 233 -1.4 Operating income 50 64 -22.1 Other* Net sales 71 94 -24.9 Gross income 40 46 -11.2 Operating income 3 2 49.0 Total Net sales 1,522 1,504 1.2 Gross income 551 551 0.0 Operating income 135 137 -1.5

* Sabra’s sales are proportionately consolidated since the second quarter of 2008.

Table 4

Consolidated Balance Sheet (in NIS million):

As at March 31 2009 2008 Millions NIS % Millions NIS % Cash and Marketable Securities 701 12.9% 470 9.7% Accounts Receivables 1074 19.8% 940 19.5% Other Accounts Receivables 245 4.5% 304 6.3% Inventory 739 13.6% 631 13.1% Investments & Long Term Loans 117 2.2% 109 2.3% Fixed Assets 1234 22.7% 1208 25.0% Intangible Assets 1245 22.9% 1081 22.4% Other Assets 74 1.4% 82 1.7% Total Assets 5,429 100.0% 4,825 100.0% Current Bank Liabilities 289 5.3% 355 7.4% Accounts Payables 657 12.2% 635 13.2% Other Creditors 681 12.5% 527 10.9% Long Term Liabilities 1,142 21.0% 1,284 26.6% Minority interest 873 16.1% 210 4.3% Group Equity 1,787 32.9% 1,814 37.6% Total Liabilities & Equity 5,429 100.0% 4,825 100.0%

For additional information: Investors Contact Yaffa Cohen-Ifrah Director of Investor Relations Strauss Group Ltd. Tel: +972-3-6752545 Mob: +972-54-5772195 Email: yaffa.cohen-ifrah@strauss-group.com Media Contact Osnat Golan Corporate Communications Director Strauss Group Ltd. Tel: +972-3-6752281 Mob: +972-52-8288111 Email: osnat.golan@strauss-group.com www.strauss-group.com

Source: Strauss Group Ltd

For additional information: Investors Contact, Yaffa Cohen-Ifrah, Director of Investor Relations, Strauss Group Ltd., Tel: +972-3-6752545, Mob: +972-54-5772195, Email: yaffa.cohen-ifrah at strauss-group.com. Media Contact, Osnat Golan, Corporate Communications Director, Strauss Group Ltd., Tel: +972-3-6752281, Mob: +972-52-8288111, Email: osnat.golan at strauss-group.com