Strauss Estimates Heavy Losses Due to Recall

By Shimon B. Lifkin

YERUSHALAYIM – The Strauss Group estimates that its product recalls due to salmonella contamination will cost the company a third of its forecasted profits for this year, Globes reported on Thursday.

Strauss notified the Tel Aviv Stock Exchange that it expects a loss to consolidated net profit in the first quarter financials, due to be released at the end of this month, of 115-215 million shekels. Company officials stressed that the final figure is subject to change.

The annual profit will be reduced by roughly NIS 170-230 million, including the cost of restoring the Elite factory to full production capacity, loss of profits while the factory is closed, and estimates of insurance coverage for some of the damage sustained by the company.

The estimate takes into account the bill for refunds to customers, the cost of collecting recalled products from stores, destruction of stocks, and the cost of compensation to consumers.

Major uncertainties cloud the giant food company’s near future: the unknown outcome of lawsuits in connection with the product recall, and how the recall will affect its market share in confectionaries.

The food company’s net profit rose 16% in 2021 to NIS 639 million. Revenue totaled NIS 8.75 billion, representing growth of 4.8% in comparison with 2020.

Meanwhile, The Health Ministry said that announces it is looking into suspected contamination of Tnuva’s production line for powdered milk.

The ministry said the milk is sold to producers who process it further and it is not marketed directly to consumers.

Initial tests on goods that contain the powdered milk have not found contamination.