20-F: G. Willi-Food International Reports Financial Results for Fiscal Year Ended December 31, 2023

G. Willi-Food International's 2023 annual report reveals a revenue increase but a decrease in net profit compared to the previous year.

Summary

• G. Willi-Food International Ltd. reported its financial results for the fiscal year ended December 31, 2023.
• Revenue increased by 9.0% to NIS 543.3 million (USD 149.8 million) from NIS 498.3 million in 2022.
• Cost of sales increased by 19.0% to NIS 422.6 million (USD 116.5 million), representing 77.8% of revenues, compared to 71.2% in 2022.
• Gross profit decreased by 15.7% to NIS 120.6 million (USD 33.3 million), or 22.2% of revenues, from NIS 143.1 million in 2022.
• Operating profit decreased by 54.9% to NIS 20.4 million (USD 5.6 million), or 3.7% of revenues, from NIS 45.1 million in 2022.
• Net profit decreased by 23.8% to NIS 31.7 million (USD 8.7 million), or NIS 2.28 (USD 0.63) per share, from NIS 41.6 million in 2022.
• The company had 13,867,017 ordinary shares outstanding as of December 31, 2023.
• Capital expenditures were $6.3 million in 2023, $3.8 million in 2022 and $2.0 million in 2021.
• The company is constructing a new logistics center with an estimated cost of NIS 110 million, expected to be completed by mid-2025.

Sentiment

Score: 5

Explanation: The report presents mixed signals with revenue growth offset by declining profits and ongoing legal and geopolitical risks. The sentiment is neutral as positive and negative aspects balance each other.

Positives

• Revenue increased by 9.0% in 2023, indicating growth in sales.
• The company is expanding its logistics capabilities with a new center.
• The company is actively seeking new business opportunities, including strategic alliances and M&A.

Negatives

• Net profit decreased by 23.8% in 2023, indicating reduced profitability.
• Cost of sales increased significantly, impacting gross profit margins.
• Operating profit decreased by 54.9%, reflecting lower operational efficiency.

Risks

• Dependence on a small number of principal clients poses a risk if they default on payments.
• Fluctuations in exchange rates could adversely affect results of operations.
• Competition in the food distribution business in Israel is highly competitive.
• Political, economic, and military conditions in Israel and the Middle East could adversely affect operations.
• Cyber-attacks on the Company's information systems could impact results of operations.
• The ongoing war in Israel and its impact on shipping routes in the Red Sea may have a material adverse effect on sales and profitability.

Future Outlook

The company is re-evaluating its strategic position, considering strategic alliances, expanding product lines, increasing sales, and examining M&A opportunities to increase market presence.

Industry Context

The food distribution business in Israel is highly competitive, with competition from local manufacturers and importers. The company faces competition from existing competitors and potential newcomers.

Comparison to Industry Standards

• The report mentions competitors such as Shemen, Tomer, Taaman, Solbar, Y.T.V Foods Industries Ltd, Fodor (Starkist and Yona), Posidon and Williger of the Neto Group, Filtuna, Vita Pri HaGalil and Shastowits, the Vita Pri HaGalil, Yachin-Zan laKol, Williger of the Neto Group, and Tomer, Osem, Barila, Vita Pri HaGalil, Williger of the Neto Group, Taaman and Tomer, Tnuva, Tara, Strauss, Seyman, and Gad Dairy.
• These companies operate in similar segments, including edible oils, fish products, canned fruit and vegetable products, pasta products, and dairy and dairy substitute products.
• The report notes that several competitors are more established, have greater market recognition, and have greater financial, marketing, human, and other resources than G. Willi-Food.

Management Changes

Legal Proceedings

• The company is involved in several legal proceedings, including lawsuits related to misleading labeling, duty-free tenders, and claims against former officers.
• A lawsuit was filed against the company's former controlling shareholder and former officers.
• A lawsuit was filed by a former CEO claiming payment of social rights and compensations.
• A lawsuit and a motion to approve it as class action was filed against Euro European Dairies to the Haifa district court.
• A lawsuit and a motion to approve it as class action was filed against G. Willi-Food and another 5 respondents to the District Court.
• A lawsuit and a motion to approve it as class action was filed against the Company to the District Court.
• On February 20, 2023, the Euro European Dairies (the Company) received, from the Ashdod Customs House, a notice of a charge for a deficit of NIS 1.75 million, which includes interest and fine.

Related Party Transactions

• The company provides services to Willi-Food Investments Ltd., its controlling shareholder, for a monthly fee of NIS 10,000.

Stakeholder Impact

• Shareholders may be concerned about the decrease in net profit and operating profit.
• Employees may be affected by the ongoing war and its impact on the Israeli economy.
• Customers may experience delays in receiving goods due to disruptions in shipping routes.
• Suppliers may be affected by the company's efforts to minimize credit risk.

Next Steps

• The company plans to continue re-evaluating its strategic position.
• The company plans to consider strategic alliances.
• The company plans to expand product lines.
• The company plans to increase product sales.
• The company plans to examine M&A opportunities.
• The company expects the new logistics center to be completed by mid-2025.

Key Dates

Keywords

Willi-Food, financial results, annual report, food distribution, Israel, IFRS, revenue, profit, kosher food, logistics center