Strauss Group Reports Steady Revenues With Increased Operating and Net Profit in First Six Months 2009

TEL AVIV, Israel - The Strauss Group (STRS.TA) today reported its results for the second quarter and first six months of 2009.

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Six Month 2009 Financial Highlights: - Sales totaled NIS 3.0 billion, similar to 2008; - Sales, net of exchange rate impacts, increased 4.4%; - Pro-forma operating profit increased 1.9% yoy reaching NIS 270 million; - Pro-forma net profit increased 1.7% yoy to NIS 134 million; - Strong cash generation: Operating cash flow improved as a result of decrease in inventory and improved working capital. Operating cash flow totaled NIS 280 million compared to NIS 1 million last year.

Ofra Strauss, Chairperson of Strauss Group, said today, “Strauss Group continues to expand globally while successfully navigating today’s challenging business environment. We continue to develop the key foundations for our long term growth, investing in the development of new areas which will serve as the Company’s future growth drivers.”

Gadi Lesin, President & CEO of Strauss Group, said today, “Our results for the first six months clearly highlight our ability to successfully stand up to the current global challenges; Strauss has succeeded in meeting its pre-defined targets, preserving sales levels while improving both its operating profit and cash flow. Our strict control of expenses and our ongoing efforts to reduce inventory and working capital has resulted in a dramatic improvement in our operating cash flow.”

Main pro-forma data for H1 2009 (in million NIS): First Six Months Second Quarter 2009 2008 % Chg 2009 2008 % Chg Sales 3,036 3,036 - 1,514 1,532 1.2%- Gross Profit 1,119 1,118 0.2% 568 566 0.3% Operating Profit (1) 270 265 1.9% 135 128 5.6% Profit for the Period 175 150 16.1% 80 75 5.7% (Net Profit (2) 134 131 1.7% 55 65 16.2%- (1) Before other income (expenses) (2) Attributed to the shareholders of the Company

The Israel Sector - Strauss Israel

In the second quarter of 2009, sales for Strauss Israel’s activities, including the coffee business in Israel, totaled NIS 764 million, a decrease of 2.9% compared to the second quarter last year. Second quarter 2009 sales by the Israeli sector (excluding coffee) totaled NIS 627 million for the period, a decrease of 2.1% compared to the second quarter last year. Sales in the second quarter were affected by the timing of the Passover holiday, with the majority of the 2009 Passover holiday sales taking place during the first quarter, as opposed to 2008 when the majority of the Passover holiday sales occurred during the second quarter.

In the first six months of 2009, total sales for Strauss Group in Israel totaled NIS 1,620 million, a 0.3% decrease compared to the same period last year. Sales by the Israeli sector (excluding coffee), in the first six months, totaled NIS 1,308 million, a decrease of 0.9% compared to the same period last year.

The Company in Israel is investing greater resources in understanding consumer behavior in a period of recession in view of the change in purchasing power, and continues to focus on the fundamental elements - product quality, service level and pricing management. The Company in Israel is investing efforts to streamline its expenses while placing emphasis on retaining its two major assets -people and brands.

Operating profit, pro-forma, in Israel increased 7.6% in the second quarter, mainly due to the improved cost structure, also drawing an increase in the operating margin, reaching 10.6% in the quarter compared to 9.6% last year.

Operating profit, pro-forma, in Israel increased by 12.1% in the first six months of 2009, primarily due to the continued improvement in the cost structure. The majority of the improvement was evident in the Health & Wellness unit. Operating profit margin in Israel for the six months improved to 11.4% compared to 10.0% last year. The improved operating profit both in the quarter and six months resulted from the ongoing cost efficiencies in both production expenses and material cost.

The Coffee Sector

In the second quarter of 2009 sales by the coffee sector totaled NIS 811 million, a decrease of 0.8%. Sales, net of the impact of currency exchange rates, grew by 5.8%. Organic growth (net of acquisitions and exchange rates) amounted to 2.9%.

The growth in local currency in the second quarter is evident mainly in the Company’s businesses in Brazil and in the former Soviet Union countries. Coffee sales in the quarter were positively influenced by the growth in volumes in certain regions, partially offset by currency fluctuations.

Sales in the first six months of 2009 grew by 2.2% year-over-year reaching NIS 1,581 million. Net of the impact of currency exchange rates, sales increase 13.1% year-over-year. Organic growth (net of acquisitions and exchange rate) amounted to 8.2%.

Coffee sales in the first six months were adversely impacted by substantial operating currency fluctuations, combined with the difficulty of raising prices in the prevailing macroeconomic environment. Growth in local currency is evident in the Company’s activity in the former Soviet Union countries, Brazil and Poland.

Gross profit for the second quarter totaled NIS 263 million (32.5% of sales) compared to NIS 271 million (33.2%) last year, a decrease of 2.9%. Gross profit in the first six months totaled NIS 493 million (31.2% of sales) compared to NIS 504 million (32.6%) last year, a decrease of 2.2%.

The decrease in the gross profit in both the quarter and first six months was mainly due to the currency impact on raw material costs in the local currency (the purchase currency of raw materials is the US Dollar, which grew stronger in relation to the different currencies in the reported period), and also due to the erosion of the various currencies against the Shekel, which led to a decrease in the gross profit, which is reported in Shekels.

Operating profit of the coffee business in the second quarter totaled NIS 73 million (9.0% of sales), similar to the operating profit in the corresponding period last year. Operating profit in the first six months of 2009 totaled NIS 123 million (7.8% of sales) compared to NIS 137 million (8.8% of sales) last year, a decrease of 10.0%. The decrease in the operating profit is mainly the result of the decrease in the gross profit and the impact of currency exchange rates.

The Sabra Refrigerated Dips Business in the USA

Commencing in the second quarter of 2008 the Company proportionately consolidated the Sabra business (50%) according to the rate of its holding following the closing of the transaction with PepsiCo.

Pro-forma sales in the second quarter of 2009 increased by 56.3%, reaching NIS 107 million compared to NIS 68 million last year. Pro-forma growth in the second quarter, net of the impact of currency exchange rates, was 30.0%.

In the first six months of 2009 Sabra’s pro-forma sales (assuming the full consolidation of Sabra’s business) increased 55.5% reaching NIS 201 million compared to NIS 129 million last year. Sales pro-forma net of the impact of currency exchange rates, increased by 32.5%.

Pro-forma operating profit totaled NIS 18 million (16.6% of sales) in the second quarter compared to NIS 9 million last year (13.6%), an increase of 90.9%.

Sabra’s pro-forma operating profit in the first six months increased 114.7% reaching NIS 32 million (15.8% of sales), compared to NIS 15 million last year (11.4%).

Sabra has continued to grow its market share, while maintaining a leading position in the refrigerated flavored spreads category. Sabra’s average market share in the first six months of 2009 increased to 37.7% compared to an average market share of 28.2% in the corresponding period last year (according to IRI figures published on June 14, 2009).

Strauss is partially consolidating Sabra’s activity (50%).

The Max Brenner Business

In the second quarter Max Brenner’s sales totaled NIS 22 million compared to NIS 24 million last year, a decrease of 8.0%. After neutralizing the impact of exchange rates, sales in the second quarter decreased by 13.6%. In the first six months of the year Max Brenner’s sales totaled NIS 46 million, similar to last year, After neutralizing the impact of exchange rates, sales in the first six months decreased by 5.9%.

Consolidated Financial Review:

Sales

Group sales in the second quarter of 2009 totaled NIS 1,514 million, compared to NIS 1,532 million in the corresponding period last year, a decrease of 1.2%. Net of the currency impact, Group sales increased 1.5% year over year. Organic growth, net of the impact of changes in exchange rates, amounted to 1.5%.

Group sales in the first six months totaled NIS 3,036 million, similar to the corresponding period last year. Net of the currency impact, growth amounted to 4.4%. Organic growth, net of the impact of changes in exchange rates in the first six months, amounted to 4.6%.

Gross Profit

Pro-forma gross profit for the second quarter increased by 0.3%, to NIS 568 million, gross margin improved to 37.5%, from 37.0% last year. Accounting gross profit for the quarter decreased by 1.7% reaching 37.3%.

Pro-forma gross profit in the first six months increased by 0.2%, reaching 36.9% compared to 36.8% last year. The gross profit was positively impacted by the improvement in activities in Israel and in Sabra and by the streamlining measures applied, and was adversely affected by the impact of currency exchange rates. The financial accounting gross profit in the first six months totaled NIS 1,121 million, similar to last year, and was maintained at a level of 36.9%, similar to last year.

Exchange rates adversely impacted the gross profit in the coffee business in the second quarter, while the improvement in Sabra and in Israel positively affected the gross profit. The Group is contending with the changes in raw material prices and exchange rates by applying streamlining measures in all areas of its activity and by raising the prices of its products.

Operating Profit before Other Income (Expenses)

Pro-forma operating profit increased 5.6% reaching NIS 135 million (8.9% of sales) in the second quarter, compared to NIS 128 million (8.4% of sales) last year. The increase in the Group’s profit is due mainly to the increase in the operating profit of the Israel sector and Sabra, which is the result of continued streamlining, and the decrease in selling and G&A expenses. The improvement in the operating profit is mainly the result of the improvement in the gross profit and the streamlining moves. In the second quarter of 2009, accounting operating profit (before other expenses) increased 0.4% reaching NIS 131 million (8.7% of sales), compared to NIS 131 million (8.5%) last year.

The pro-forma operating profit totaled NIS 270 million (8.9% of sales) in the first six months, compared to NIS 265 million (8.7%) last year, an increase of 1.9%. The increase in the Group’s operating profit is due mainly to the increase in the operating profit of the Israel sector, which improved by 12.1% as a result of streamlining the cost structure of the Company and of the decrease in the rate of selling and G&A expenses. This, in addition to the improvement in Sabra’s operating profit. The operating profit margin in the first six months rose to 8.8%, compared to 8.4% last year.

In the first six months of 2009, accounting operating profit (before other expenses) increased 4.1% reaching NIS 266 million (8.8% of sales), compared to NIS 255 million (8.4% of sales) last year.

Income for the Period

Income for the second quarter, on a pro-forma basis, increased 5.7% totaling NIS 80 million, compared to NIS 75 million last year. Accounting income for the period totaled NIS 57 million, compared to NIS 66 million last year.

Income for the first six months, on a pro-forma basis, increased 16.1% reaching NIS 175 million, compared to NIS 150 million last year. Accounting income for the period amounted to NIS 147 million, compared to NIS 159 million last year.

Income for the Period for the Shareholders of the Company

Pro-forma income for the shareholders of the Company in the second quarter totaled NIS 55 million, compared to NIS 65 million last year, a decrease of 16.2%. Accounting income for the shareholders of the Company in the second quarter totaled NIS 37 million, compared to NIS 56 million last year, a decrease of 33.8%. This decrease is due mainly to the fact that the second quarter results included a NIS 22 million other expense impairment in goodwill, while in the comparable period last year, other income included a capital gain of NIS 27 million as a result of the commencement of the PepsiCo partnership with Sabra, as well as from an increase in the minority share of the income following the TPG transaction (acquisition by TPG Capital of 25.1% of the Strauss Coffee shares ).

Pro-forma income for the shareholders of the Company in the first six months increased 1.7%, reaching NIS 134 million compared to NIS 131 million last year. Accounting income for the shareholders of the Company, in the first six months totaled NIS 112 million compared to NIS 140 million last year, a decrease of 20.4%.

Table 1

Following are the condensed financial accounting statements of income for the quarters and the six month years ended June 30, 2009 and 2008 (in NIS millions):

First Six Months Second Quarter 2009 2008 % Chg 2009 2008 % Chg Sales 3,036 3,036 - 1,514 1,532 -1.2 Cost of sales not including impact of hedging transactions 1,917 1,921 -0.2 946 966 -2.1 Revaluation of the balance of commodity hedging transactions as at end of period (2) (6) 3 (9) Cost of sales 1,915 1,915 - 949 957 -0.9 Gross Income 1,121 1,121 - 565 575 -1.7 Selling and marketing expenses 678 684 -0.8 344 352 -2.4 General and administrative expenses 177 182 -2.4 90 92 -2.4 Operating income before other income (expenses) 266 255 4.1 131 131 0.4 Other income (expenses), net (27) 20 (22) (8) Operating income after other income (expenses) 239 275 -13.3 109 123 -11.2 Financing income (expenses), net (27) (54) -50.9 (31) (29) 6.5 Income before taxes on income 212 221 -4.2 78 94 -16.7 Taxes on income (65) (62) 5.2 (21) (28) -22.3 Effective tax rate 30.8% 28.1% 27.3% 29.3% Income for the period 147 159 -7.9 57 66 -14.4 Income attributed to shareholders of the Company 112 140 -20.4 37 56 -33.8 Income attributed to minority interest 35 19 82.6 20 10 90.3

Table 2

Following are the condensed results of business operations (based on the Company’s management accounting statements) for the quarters and the six months ended June 30, 2009 and 2008 (in NIS millions):

First Six Second Months Quarter 2009 2008 % Chg 2009 2008 % Chg Sales 3,036 3,036 - 1,514 1,532 -1.2 Cost of sales 1,917 1,918 -0.1 946 966 -2.1 Gross Income 1,119 1,118 0.2 568 566 0.3 Selling and marketing 678 684 -0.8 344 352 -2.4 expenses General and administrative 171 169 1.5 89 86 3.4 expenses Operating income - 270 265 1.9 135 128 5.6 management accounting Financing income (expenses), (27) (54) -50.9 (31) (29) 6.5 net Income before taxes on 243 211 15.4 104 99 5.3 income Taxes on income (68) (61) 13.4 (24) (24) - Income for the period - 175 150 16.1 80 75 5.7 management accounting Income attributed to 134 131 1.7 55 65 -16.2 shareholders of the Company Income attributed to 41 19 113.7 25 10 143.8 minority interest

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 and the six months ended June 30, 2009 and 2008 (in NIS millions):

First Six Months Second Quarter 2009 2008 % Chg 2009 2008 % Chg Israel sector Net sales 1,308 1,320 -0.9 627 640 -2.1 Gross income 542 533 1.8 261 261 0.3 Operating income 149 132 12.1 66 62 7.6 Coffee sector Net sales 1,581 1,548 2.2 811 818 -0.8 Gross income 493 504 -2.2 263 271 -2.9 Operating income 123 137 -10.0 73 73 0.8 Other* Net sales 147 168 -12.5 76 74 2.7 Gross income 84 81 3.7 44 34 29.4 Operating income (2) (4) -50.0 (4) (7) -42.9 Total Net sales 3,036 3,036 - 1,514 1,532 -1.2 Gross income 1,119 1,118 0.2 568 566 0.3 Operating income 270 265 1.9 135 128 5.6

* Sabra’s sales are 100% consolidated in the first quarter of 2008 and proportionately consolidated (50%) commencing in the second quarter of 2008 and thereafter.

Table 4

Consolidated Balance Sheet (in NIS million):

As at June 30 2009 2008 Current assets Cash and cash equivalents 935 358 Marketable securities and deposits 156 60 Trade receivables 964 987 Income tax receivables 59 51 Other receivables and debit balances 200 286 Inventory 714 700 Assets classified as held for sale 3 Total current assets 3,028 2,445 Investments and non-current assets Other investments and long-term debit 132 96 balances Assets designated for the payment of 6 6 employee benefits, net Fixed assets 1,271 1,231 Intangible assets 1,286 1,417 Deferred expenses 52 60 Investment property 21 18 Deferred tax assets 8 9 Total investments and non-current assets 2,776 2,837 Total assets 5,804 5,282 Current liabilities Current maturities of debentures 92 86 Short term loans and credit 179 634 Trade payables 609 702 Income tax payables 75 44 Other payables and credit balances 409 450 Provisions 29 39 Total current liabilities 1,393 1,955 Non-current liabilities Debentures 1,474 1,069 Long-term loans and credit 19 51 Long-term payables and credit balances 50 30 Employee benefits, net 31 20 Deferred taxes 103 125 Total non-current liabilities 1,677 1,295 Group equity 2,734 2,032 Total liabilities and equity 5,804 5,282

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 www.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