Wilipod's Profit Surges on Shekel Strength but Consumer Prices Remain Unchanged
Wilipod, an Israeli food importer controlled by BSD Crown and the Wiliger brothers, reported a significant rise in gross profitability in the second quarter of 2024, driven by the strengthening of the Israeli shekel against the US dollar and euro, the main currencies used for purchasing its products. Despite this, consumer prices did not decrease accordingly. The company posted sales of 160.5 million shekels, roughly flat compared to the same quarter last year, with a net profit decline of 38.5% to 12.7 million shekels, mainly due to a sharp drop in financing income.
Gross profit increased by 21.5% to 53.5 million shekels, raising the gross margin from 27.4% to 33.3%. Wilipod attributed this jump to improved purchasing prices influenced by favorable exchange rates and a focus on selling more profitable product lines. However, despite earlier public statements by Chairman Tzvika Wiliger in early 2024 promising no price hikes during the war and criticizing competitors for raising prices, Wilipod raised prices three weeks later due to increased transportation costs and has not reduced prices since the shekel's appreciation.
Operating expenses rose, with sales and marketing costs up 18.5% to 19.9 million shekels due to higher logistics, advertising, and staffing expenses related to a new logistics center under construction. General and administrative expenses increased by 28% to 8.6 million shekels, reflecting higher salaries, stock-based payments, and new managerial hires. Financing income fell sharply to 3.5 million shekels from 23.3 million shekels the previous year, impacting net profit.
Nevertheless, operating profit grew 21.9% to 25 million shekels, with the operating margin climbing to 15.6% from 6.7%. CEO Vasi Wiliger highlighted the ongoing improvement in operational profitability as a result of strategic focus on a more profitable product mix and the shekel's positive effect on cost structure. The company is progressing steadily with its new refrigerated logistics center, expected to begin operations in Q4 2024, which is anticipated to enhance logistics capabilities, reduce operational costs, increase flexibility, support long-term strategy, and enable entry into new product categories and business opportunities.
