Hi, everyone, thank you for joining us today. Welcome to Strauss Group Q2 2023 results virtual conference. Following management's formal presentation, we will conduct a Q&A session. Please feel free to post any questions you may have in the chat box or via my email or directly to my WhatsApp. As a reminder, this online Zoom conference is being recorded today, Tuesday, August 15, 2023. I would like to remind everyone that this online webinar may contain projections or other forward-looking statements regarding future events or the future performance of the company. These statements are only predictions and may change as time passes. Strauss does not assume any obligation to update that information. Actual events or results may differ materially from those projected, including as a result of changing industry and market trends, reduced demand for our products, the time and development of our new products and their adoption by the market, increased competition in the industry and price reductions, as well as due to risks identified in the documents filed by the company with the Israel Securities Authority. Online today are Mr. Shai Babad, CEO of Strauss Group, and Mr. Ariel Chetrit, CFO, and myself, Daniella Finn, Director of Investor Relations. We shall start with a recap of the quarterly results by CEO, Shai Babad, and then move on to the financial highlights for the quarter presented by CFO, Ariel Chetrit. The presentation we will go through today has been sent to you earlier, and is posted on our website. Shai, please go ahead. Thank you very much, Daniella, and thank you very much, everybody, for joining us here today. I will start with a short overview of our operations this quarter and this first half of the year, and then, Ariel, will go into deep analysis of the figures. We are a leading food and beverage company. We finished the first half of 2023 with approximately 5.2 billion shekels, which is a substantial growth. I'll show it later. We finished with approximately 220 million shekels in net profit. We have 18,000 employees. We have a market share of 12.1% in the Israeli food market. We're rated by Maala ESG rating of Platinum Plus. We operate in approximately 20 countries. We have a market cap of ILS 10 billion. Nine of our brands were ranked in the top 100 brands, Israeli brands, with Strauss being number 13 and first in the food industry. This is basically just a small glance of us. When we look at our portfolio, we have a very balanced portfolio with high-performing and lovable brands. Our company is divided into four major categories. We have Strauss Israel, which constitute approximately 50%, 40%-50% of the results. We finished with ILS 2 billion this half, with almost 16% growth. We have Strauss Coffee, which operates here in Israel, in Europe and in Brazil, with ILS 2.5 billion revenues and approximately 13% growth. We have Strauss Water Business, which operates mainly here and in China and a little bit in the U.K., with approximately 400 million shekels, with 2.5% growth. We have Sabra and Obela, which is a fresh and dips company within the U.S., with a partnership with PepsiCo, with approximately 260 million shekels revenues with 35% growth. This is a little bit misleading, because last year we had, we had incidents of FDA letter, food safety incidents, and also a pipe that blew up in our factory, which meant that we were not on the shelves for a couple of months. This is a little bit misleading. Compared to 2021, sorry, there's actually a decline here. When we look at our geographical spread, we are very diverse, which helps our portfolio to be more resilient. We saw last year with everything that was going on with the recall in Israel and everything that was going on with Sabra, that because of our operation in Brazil and in the coffee company, the company managed to stay with profits and to finish the year on better terms than what was foreseen, because of that diverse portfolio. Our operations in Brazil is continuing to grow with 26% of the operations, BRL 1.4 billion revenues. We have, after that, we have our, our operation in Eastern Europe, with 14% of the portfolio, ILS 750 million, and then China and the US with 4% each, with approximately ILS 200 million operations. Israel constitutes 50, a little bit more than 50%, with ILS 2.8 billion of operations. When we look at the results, again, you can see that compared to last year, there's a growth in revenues of 13%-14%, organic growth of 10%. Gross profits have declined, have increased to ILS 1.6 billion, but the profitability, the margins of the gross profit has declined to 32.4% when you compare it to 2021. Compared to 2022, there is a, It raised a little bit, that's not taking into consideration the recall that we had in confectionery and what happened in Sabra. We do see our profitability declining because of the inflation, because of cost of goods, and I'll address it in a second. This phenomenon is also going into our EBIT with NIS 380 million, with some margins of less than 8%, 7.3%, which are quite low. Net profit of NIS 220, with 4%. Operating cash flow with -NIS 165 to free cash flow -NIS 365. What I can say about the operating profit is that the cost of goods was not fully covered, but the rise of prices, the increase in prices that we have implemented here in Israel and in the world, and the inflation is higher than what we can accumulate or receive back from our customers. What we, what we are doing is we opened up and launched a productivity journey within the next two years that will touch each and every article and section from our top line to our costs in order to increase back our profitability, understanding that we cannot recover all the erosion of the inflation just from price, and we will need to do productivity. We need to take upon productivity efforts to bring back the profitability levels to a double-digit number in the operating profit. Within the cash flow and the operating cash flow and the free cash flow, we do see that there's a decline. This decline is partially because our net profit and not, and EBIT is quite, it's lower than what we used to have in the past, but also because inventory days have went up substantially. Since we put a lot of procedures down in food safety and food quality, with a lot of monitoring and control, that means that inventory days went up because we do a positive release. We keep the inventory for a couple of days before we release it, because we wanna avoid having any incidents of food safety outside our plants, and that, of course, has its impact on our inventory. Our plans are, for this year and going ahead, are divided into three major sections. We call it recover, transform, perform. Recover, we look at the things that we need to do in the company, which need to be recovered. It's businesses that are not performing basically, and how do we recover them? Transform means, what do we need to do, changing the, the way that we operated till today, and what needs to go through a major transformation? Perform is what do we need to outperform and to boost our growth engines in order to boost our performance. When we look at recover, and we look at businesses that we need to recover, we have here two major businesses, Sabra and our confectionery. When looking at our confectionery, we see that we went back to 24.4% compared to 29.4%, which was before the recall. In order to compare apples to apples, since there were some categories that we went out of, so the gap is not actually 5%, it's a little bit less. We do have still a way to go, but the confectionery had made a nice turnaround, coming back quite fast back into the market. We think that next year already, the platform, when we compare apples to apples, taking into account SKUs that we went out of, that we will be able to reach almost on the top line, the same platform that we had before the recall. When it comes to profitability, this will take a little bit longer because all the food safety, food quality issues and the cost of goods inflation that we had will have its impact, and we will work on it to get back also the profitability platform. When we look at Sabra, it's a little bit different story. Going back, it, it's been more difficult. Unlike Israel, in the US, there are either one or two entry points in which you can negotiate twice a year, which you can negotiate with the retails, retailers going back into the shelf, and the next one will actually be October, November, which we'll, we'll negotiate going back in 2024 into the shelf. We managed to get back to 40, almost 41% market share, which puts us back as a market leader, but private label has grown very much here, and the retailers are not bringing us back the way they used to bring us back in the past, saying that they're not going to put all the eggs in one basket, and they are going to put private label and other brands with us. That means that, getting back to 60, above 60%, we don't think that will be reachable. Our aim now is to get to above 50, 50 plus% in market share and to work very, very hard on profitability and also beyond homes. When looking at the transform, we continue to build our, our, our, our company as one. What we have done in the transformation progress, we flattened the organization in a way that we are not anymore a holding company. We're not managing the company as a holding company, which has different companies. We have one stream of HR, one stream of finance, and one stream of operations, which we have built, that are going all across the organization to all the different companies, trying to achieve operational excellence, human resource excellence, and finance excellence in everything that we do. When it comes to operational excellence, it also includes food safety and food quality, and we now set up the same standards, the same utilization, the same food safety procedures and monitoring for all our factories, and we don't have different silos like we had in the past. This will help us to build us to become way more resilient than we were until today, and will help us to bring productivity. One more thing that we understood that we need to do in our, in our, in our transformation is to invest much more in digitalization, and we've put a lot of resources into our IT infrastructures, upgrading our system into the cloud, upgrading cybersecurity, upgrading our data collection and BI systems, so that we can take decisions on real-life analytical data. That has been part of the journey of transformation, which we have taken. When we look at perform the growth, we look at innovation, and when we start with innovation, there are two categories here. One is Nail, and Nail is a new department that we developed here, we implemented here in Strauss, which is looking into all the new food technologies which we can embed in our company, in our categories, in our products that we manufacture. It's finding the right connection between technologies that are outside there, to the categories that we produce here, and bringing innovation into them. The second part of innovation is the kitchen. We, as you know, we have a hub for FoodTech. We are the hub for FoodTech here in Israel, promoting, investing, and leveraging Israeli FoodTech companies. We are gonna have our conference again this year on seventh and eighth of November. Of course, you're all welcome to come. We would love to have you as our guests, I think that the amount of new technologies and new companies that we'll see there will be quite fascinating. We also are looking at our growth engines, look at global infrastructure. We invested in our second factory in China. We do see in China a substantial growth in the water business. We came from number 5th to number 3rd, number 3 in the industry right now. We are number 3 when it comes to point of use in the water solutions. Our aim in 3 years is to become number 1, and we understand that when we manufacture our products within our plants, we increase our productivity and also the time to market. Last but not least, we will revise our strategy, understanding the world has changed. Many things have happened in the past two years since we last our strategy. The situation here in Israel has changed, the political, environmental situation, inflation, and, and interest rates have changed all over the world. Cost of goods have changed all over the world. And since the environment has changed a lot, and we had a recall in the, in the US, in the Israel, sorry, in the FDA letter, and a pipe blowing up in our plant in the US. Taking all those things into consideration, we will do a revision to our strategy, being more concrete on the directions moving ahead. It's important for me to mention that so far, we are following the strategy that we have launched 2 years ago, and we are growing, as you can see from our results, more than 5% a year, which was the aim that we put in our strategy. Last but not least, looking ahead into the next quarter and ahead. We will focus on the strategy review, and we'll publish our strategy review. We will focus very much on profitability. We do understand that, with the lack of ability to roll out the full cost of goods to the consumers, we need to find ways to be way more productive, and that will come through all the streamlines of our PNL. From top line of revenue management and Design to Value and marketing efforts into all our cost items, that's manufacturing, logistics, supply chain, S&OP, et cetera. In all of them, we have specific targets for within the next 3 years to improve our profitability and improve our margins. We will continue building growth engines such as in China, but not only Brazil as well, and in Israel, building the alternative milk factory. The FoodTech event, which I mentioned before, we will continue to push very, very, very hard on digital transformation. We understand that we had a huge gap there, and we are closing it up. A lot of work is being done to make sure that we have all the right data, we have all the right systems in place, we have the right operational systems in our plants. We will continue to focus on making our organization one, setting up all the procedures, the right procedures between operations and sales, so that we run a metrics management organization. We will enhance our ESG capabilities. We will put a lot of emphasis on portfolio optimization. I didn't mention it before, but when we talk about recovery, when we talk about our recovering our core business, it's also looking at businesses which we don't see fit or we don't think that are yielding enough returns or that are not adjusted the right way to our portfolio, into our strategy, and therefore, we will divest them. You can see that already in the first half of 2023, there are some things that we've, we've divested, such as Obela in Europe, such as Serbia, which will be in the middle of the process. We did change the deal with Virgin, with the water business in a Virgin company in the UK, and we've made a new deal with Culligan. Frozen goods, which we was a category here in Israel, we shut it out as well. We are looking at other things in our portfolio that we will divest in the near future. Everything that it will not be in accordance to either our strategy or the profitability margins and growth rates that we set to ourselves, we will depart from. Last but not least, we will continue to work very, very hard on boosting quality and safety. If we are now in a position where quality and safety is more monitoring and enforcement, and that costs us a lot of money, we will move from quality and food monitoring and control to quality and food assurance. Making sure that the process itself, when we set out the processes, when we set out the policy, for quality and safety and sanitization, all of that will be in line with the highest level of food quality and food safety procedures, so that we can take down enforcement and monitoring costs in order to increase profitability. That's a, like, general overview of our activity, and now I'll pass it on to Ariel. Thank you, Shai. Good day, everybody. Shai went briefly through the results of the first half. I will walk you through also briefly through the results of the Q2 in more specifics. If we look at the sales of the Q2, we can see a very nice growth rate of above 15%. Even if we take out the FX translation effect, still we can see a very high growth rate of 12.4%. On the right-hand side, we can see that this growth rate is very high with all of our business segments. Of course, if we look at the different major causes for this growth rate, on the left-hand side of the bridge, we can see that a lot of growth came from the confectionery and Sabra's recovery process. We all should remember that in the Q2 last year, Sabra and the confectionery businesses sold very, very little. Therefore, we see a very large growth in the numbers. If we look on the right-hand side of the bridge, we can see that all the other businesses that are normally functioning, we see also very nice growth rates. In general, we can say that 3%-4% of the or 50% of the growth came from price increases that were made last year, and some of them in mainly in Israel, were made already this year. The other 50% came from volume growth. We have very nice volume growths in both in the geography of Israel and in Brazil this quarter. If we look at the gross profit for the Q2, we can see that in absolute numbers, we have ILS 838 million shekels of gross profit this quarter, which is much higher, not only than the Q2 in the previous year, but also in the Q2 of the years 2021 and 2020. This is, for us, very good news. If we look at the gross margin, we can see a still a very low number, which is roughly 32% gross margin. And we used to see much higher gross margins in 2021, and before that of roughly seven 37%-38%. The main three causes for the decrease in the erosion in the gross profitability are the following: The first one, as Shai mentioned, we see still a very high inflation in our inputs. You can see in our MD&A report, we showed you there the main materials that are being used by the group, mainly green coffee, cocoa, sugar. We can see that these inputs are continuing to rise, and we still see a lot of inflation going on there. The other, the second cause is the recovery of the confectionery. We are recovering very nicely in the top line, like Shai explained before, and our market share are going very nicely, but in the bottom line and profitability, we still need a lot of sales in order to leverage our costs. Some of our costs are heavier than what we used to see in the past because of quality and production, higher costs, and therefore, still, we have a heavy weight of the confectionery results on the profitability of our group. The third cause is Sabra. We have a slow recovery there. As you can see from our results, we are still losing a little bit of money there, very close to being balanced in our operating profit, but a very low gross profitability there, and this is also a weight on our Group's profitability. When we look at the EBIT, we can see that we are improving in our absolute EBIT numbers, getting closer to what we used to see in 2021 and 2020. Still, we have a little bit more way to go. Hopefully, we'll be there on an better, much better running rate by the end of this year, the Q4, and looking forward to 2024. We're, we're still looking forward to continuing our improvement journey in confectionery, Sabra, and the productivity efforts in order to manage the input inflation in a better way with our EBIT line. If we look on a few more results on the year to date, the first half, the only thing I have to say on the top line is that we are continuing our very good momentum from last year and from the year before that in our top line. Continuing to grow very nicely across our different, different business segments. As you can see, we are gaining in many, many of our businesses, and categories, and geographies, a market share, or at a minimum, maintaining our current market share. If we look at the net income, we can see that we are in a positive momentum. Still, we have a distance to go back to normalize the net income that we've seen in 2021 and before that, but we are in the right direction. Last but not least, just a few words on Brazil. We want to emphasize a few points. First, on the sales. Yes, the price increases, most of them were made last year, and we didn't see any price increases this year. On the contrary, we've seen some price decreases, selling price decreases in the first half of 2023. This is due to the expectation of Três Corações that green coffee prices in Brazil will go down a little bit. Unfortunately, these ex-expectations were met only after the balance sheet date. We are seeing in Brazil, green coffee prices going down a little bit from July onwards, until today as we speak. In the first half, the decrease of selling prices wasn't met with the decrease of cost of goods sold. Therefore, we can see the slight erosion in the gross profitability margin. On the other hand, in the top line, all of the growth in Brazil came from volume. As you can see in our market share reports, we are very close to 34% currently in Brazil, and this is our highest market share ever. We're gaining market share in very, a, a very good rate of growth, and we're very, we're very happy with that. If we look at the gross profit, absolute gross profit, we can see that we are in a new, in a new zone of gross profit of BRL 900 million reais for the first half of the year, compared to a slightly more than BRL 550 million reais in the years 2021 and before that. This is a something that is very important to emphasize. We have higher gross profits in Brazil, and we expect to maintain this higher level going forward. If we look at the EBIT line, we can see that last year our EBIT line was very high in the first half. This was mainly due to the fact that we raised prices very, very, very sharply last year, much more sharply, sharply than the rise that we've seen last year in the green coffee prices. We had a great, let's say, head start in the first half of last year. At the second half of 2022, we've seen a normalization in the EBIT platform, and it continued into the first half of 2023. Another thing to mention is that we invested much more in OpEx in the first half of 2023 in order to maintain and even increase our market share and our sales in terms of volume in Brazil, and we have seen the results. You can see it in our market share, and the volume grew very nicely, this 1st half. We invested much more in A&M and in increasing our sales activities and distribution activities to get to more sale points today and in the future. Still, we can see that the platform of the EBIT in Brazil is much higher than what we've used to see in 2021 and before that, and we expect this to continue going forward. on to those of you who haven't read or did read about it, our biggest competitor in Brazil, JDE, which is a company that holds roughly 20% of the coffee market share in Brazil, announced that it purchased the 4th largest player in Brazil, Maratá. We expect this merger to happen or to be approved by the end of this year by the antitrust, if it will be approved, of course. After this acquisition, JDE combined market share with Maratá will be roughly 26%-27%, compared to our 34%. This is, of course, a very important news for us and for our activity of the Tres Coracoes company in Brazil, we see some positive sides to it. We see also some risks to it, of course, and we will monitor it very closely and report on any developments in the following quarters. I will end there with that, and we will open the discussion for your questions, if you have any. Thank you very much, Ariel. Yes, we have a couple of questions today from Tavy Rosner from Barclays. Tavy, thank you very much for your questions. First questions is regarding investments: You said you are increasing CapEx. Can you talk about any milestones or specific upgrades, et cetera? So The way in which we are going to increase the CapEx is divided into two categories. One category is building the capacity for the future, which means into the new categories which we need, such as the alternative milk, that we are building the new plant, and anywhere that we'll need the capacity for new categories in which we are entering. The second, the second way in which we are doing our cap investments is in what we call is strengthening the core, strengthening our core business. Which means we look at the infrastructure that we have today, and we see where we need to invest and how we need to invest in order to, to stand with food quality and food safety regulations, or where we need it for productivity and higher productivity of our, of our plants, of our factories. Those are our two major ways in which we invest. Another w-- another stream, important stream which we, which we will invest in is, of course, our IT systems, IT infrastructure, and all the digital transformation which we are going through. We do understand that we need to move all our activity into the cloud. We need to be based our decisions on data-driven and collecting the data and analyzing the data. We need to bring new systems into our factories, when it comes to the production lines, so There's a lot of work that is done on the IT transformation. There's a lot of work that's done on reinforcing the core business and the infrastructure of the core business, whatever will stay with us in the core. There's investment that will be done in order to set the company for the future. Thank you, Shai. The second question from Tavy is: Beyond the recent divestments in coffee, are there any other potential divestments down the road? Without going into specific divestment, as I mentioned before, we are looking the whole time at portfolio optimization, asking ourselves which businesses are in line with our strategy, which businesses are not? Which businesses are in line with our growth rates, which is targets and which are not, and which businesses are profitable enough that meet our strategic goals and which are not. According to those categories, we will divest some of the activity. We already divested some in the 1st half of 2023. We will continue that in the 2nd half of 2023 and into 2024. In general, note, yes, we will continue portfolio optimization, and right now, we won't go into any specific category or company. Next question is: You talked about the increased competition in Israel coffee. Can you elaborate? ppened in Israel is that regardless of the competition that has increased, what we see the most is the erosion of the price of green coffee. That has affected our profitability more than anything else. We do see an obstacle of raising prices here in Israel to the Israeli consumer. Not everything that we get in cost of goods, we can transfer fully into the consumer and the customers, and we do see the margins declining because of that. I think that is the major effect. With that, of course, the entrance of Nestlé and the capsule business into Israel, of course, enhances the competition a lot, and private label coming in also enhances the competition The major effect is the green coffee prices, which affect a lot of our profitability. Thank you. The final question is regarding Sabra: When do you expect to return to profitability, and what kind of profitability margins can we expect, EBIT margins going forward? We do expect that in 2024 already, the turnaround should be starting to go from the negative side to the positive side, we should expect a break-even above results. Regarding what margins we expect, we are expecting to see how we get back to a double-digit operating profit in Sabra within the a near future. We will work very hard on the plans for Sabra to see how we can reach that in the next two, three years and bring back the operating profit. We do see that after going into research on companies that went through a substantial recall, such as Sabra, that it takes time. It takes two, three, sometimes more, to get the business back on track. With everything that happened with cost of food and inflation, and the competition enhancement, and the fact that we were not there for 8 months and private label grew so much and competitors have grown, competition has grown, so it is gonna take more time, but we are working very hard on it. One other thing that we are doing in Sabra is we are looking to the categories beyond hummus. Not just the category of hummus itself, but Mediterranean food as well, in order to see how we can take a very, very strong brand, which is Sabra, and try to produce adjacent products in order to strengthen the brand and increase sales and margins. Thank you. It seems that at this point, there are no further questions, so I pass it back over to you, Shai, for a couple of closing remarks. First of all, thank you very much for being with us today. We're very pleased, you came. If I just sum up the Q2 and the first half of 2023, I think the major story is that with substantial growth that you can see in the results, we do see a decline in margins, and we do see a decline in the profitability. I think that going into Q3 and Q4, we are doing a lot of efforts, which we started already on productivity in order to increase profitability, and we hope to see some of the fruits already in Q3 and Q4, and of course, a lot of fruits going into 2024 and 2025, subsequently. we do, we will continue to put a lot of effort on the turnaround of the two businesses of the confectionery and Sabra. We do want to see the confectionery business going into at least platform on revenues next year. We understand that in Sabra there's a lot of work, and we're gonna put a lot of attention into doing that turnaround so that we can start getting to the break-even above already next year. That's just a summary of the results. I think the productivity and growth are going to be major focuses for Strauss within the near future. Great. Thank you very much. I'd like to thank you all for joining us today. I'd like to remind everybody that all the materials regarding these results, including a recording of this conference call, will be available on the website of Strauss Group's Investor Relations. Thank you. Enjoy the rest of your summer, and we'll see you next quarter.