Strauss warns of impact on profits due to Salmonella incident

Strauss Group estimated the impact of Salmonella infections and associated recalls of approximately US$33 million on first quarter financial results.

The company said first-quarter 2022 net profit is expected to be hit by the new Israeli shekel by $115 million to $125 million ($33.6 million to $36.5 million). The March 31 financial statements are expected to be released around May 25.

During an inspection of Strauss’ factory in Nof Hagalil, Israel, in April, the Health Ministry found “significant” deficiencies in the company’s protocols. The agency suspended the factory’s approval for three months or until the problems detected during the visit were corrected.

Elite branded items such as cakes, wafers, energy cereal snacks, energy chocolate rice cakes, chewing gum and caramel candies were sent to the United States, Canada, Australia, in New Zealand, Austria, Brazil, Cyprus, Estonia, France, Germany and Hungary. , Italy, Luxembourg, Netherlands, Poland, Romania, Russia, South Africa, Spain, Sweden, United Kingdom and United States.

“The valuation of the business is based on estimates which include a decrease in sales, the costs of collecting the products from retailers, an estimate of the extent of the total destruction of the products, compensation costs such as determined by the company for consumers, additional ancillary costs and tax effect,” according to a statement from Strauss.

Wider profit warning
Israel’s Health Ministry reported that 21 patients of varying ages were linked to the incident and six were hospitalized.

Preliminary estimates show that due to the recall and plant closure, the impact on net profit for 2022 is expected to be between 170 and 230 million new Israeli shekels (49.7 to 67.2 million). dollars).

Strauss said the figures for 2022 “also include estimates regarding the cost of returning the plant to full production capacity, loss of profits due to plant shutdown and timing of return to production. and sales based on various possible scenarios, including insurance coverage for some of the damage to the business.

The Strauss Group said it could not yet assess the impact on the market share of confectionery products, as it depends on the timing of the return to full activity and other indirect implications of the recall. The company added that it also cannot judge the effect of legal action related to the recall and plant closure.

Out of 300 samples taken from the factory production line, raw materials, work-in-progress and finished goods both in the factory and in the market, about 30 positives were found. Salmonella has been detected on a production line and in liquid chocolate used to make finished products.

Death in a specialized home
In a separate incident, Israel’s Health Ministry reported that three people died at the Beit Dafna Specialty Facility in Holon.

In early May, an inspection of the site after reports of illness revealed that there was no strict separation of food into the various cooking processes and no proper procedures for handling food.

The results indicated that the disease resulted from contaminated meat due to improper handling and the kitchen being closed. A report was submitted to the Ministry of Social Affairs and the Israeli police.

Clostridium perfringens was found in food samples and fecal cultures from seven patients, indicating the cause of the infection. A total of 33 residents fell ill, six were hospitalized and three died.

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