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Suspect hummus takes sheen off Struass' rising profits

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Quarterly profits at Israeli food company Strauss Group rose, thanks to higher sales.

But shares sunk, as Strauss separately announced that a product recall in the United States would hurt profits by $5.

Strauss reported adjusted net profits in the three months to September 30 at around 92m shekels ($23.8m), up 7.0% year-on-year.

Coffee sales in Brazil rise

As well as being the second-largest company in the Israeli food and beverage sector, Strauss has a large international coffee business.

Coffee sales in Serbia, Romania, and the former Soviet Union were sharply down, and in Poland they were stagnant.

But sales in Brazil surged, up some 30% year-on-year in shekel terms, thanks to rising prices.

And sales in Israel rose as well.

Rising revenues

Revenue from the coffee segment grew some 9%, to 955m shekels in the third quarter as operating profit jumped 76%, helped by better product mix and higher prices.

Strauss said the higher profits was down to "growth in sales volumes, price increases implemented in almost all countries where the company is active [other than Israel], an improvement in the product mix sold in part of the company's countries of operations".

Straus also noted "a reduction in customs duties on the import of green coffee to Romania, which lowered the cost of raw materials and allowed for a reduction in prices".

Hummus recall

But shares in the company fell as it warned of a $5m hit to profits from a product recall.

Strauss will have to recall Sabra-brand hummus in the United States, due to fears of listeria contamination at its Virginia-production facility.

Last year Strauss was forced to recall some 30,000 cases of Sabra hummus, also due to listeria fears.

By William Clarke

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