Stock to watch – G. Willi-Food International Ltd. (NASDAQ:WILC)

Willi-Food International Ltd. (NASDAQ:WILC) is with Insider ownership of 58.00% and institutional ownership counts to 14.10%. Shares float is 4.10M and outstanding shares are at 13.29M. The float short is currently 0.06% and short ratio is 0.38. The stock is currently trading at $7.23 for the day. G. Willi-Food International Ltd. stock made income 2.30M on sales of 88.00M. ROA sticks to 1.90% and ROI is 4.50%. Shares have moved -5.59% from its 1 Year high price and changed 41.49% from its 1 Year low price. The shares registered RSI (14) at 55.75 and ATR factor was seen at 0.11.

Willi-Food International Ltd. (NASDAQ:WILC), a global company that specializes in the development, marketing and international distribution of kosher foods, today reported its financial results for the fiscal year ended December 31, 2017.

Fiscal Year 2017 Highlights

  • Sales increased by 6.0% from fiscal year 2016 to NIS 312 million (US$ 90 million)
  • Net profit increased by 94% from fiscal year 2016 to NIS 21.1 million (US$ 6.1 million), or 6.7% of sales
  • Gross profit decreased by 3% from fiscal year 2016 to NIS 74.3 million (US$ 21.4 million)
  • Operating profit decreased by 26.3% from fiscal year 2016 to NIS 16.8 million (US$ 4.8 million), or 5.4% of sales
  • Net cash from operating activities decreased by 24.8% from fiscal year 2016 to NIS 13.0 million (US$ 3.8 million)
  • Cash and securities balance of NIS 256.6 million (US$ 74 million) as of December 31, 2017
  • Earning per share increased by 94% to NIS 1.58 (US$ 0.46) in fiscal year 2017
  • Willi-Food’s operating divisions include Willi-Food, a distributor of a broad variety of kosher foods, and its wholly owned Gold Frost, a designer, developer and distributor of branded kosher innovative dairy food products.

Fiscal 2017 Summary

Sales for fiscal year 2017 increased by 6.0% to NIS 311.9 million (US$ 89.9 million) from NIS 294.2 million (US$ 84.9 million) in fiscal year 2016. The increase in sales was primarily due to an increase in  personnel in the sales and trade department and due to a strike at the Ministry of Health in the third quarter of 2016 which limited release of goods from the port and caused a decrease of NIS 6 million in sales in 2016.

Gross profit for fiscal year 2017 decreased by 3.0% to NIS 74.3 million (US$ 21.4 million) compared to NIS 76.6 million (US$ 22.1 million) recorded in fiscal year 2016. Gross margins for fiscal year 2017 decreased by 8.5% to 23.8% compared to gross margins of 26% for fiscal year 2016. The decrease in gross margin was primarily due to reductions in the prices of certain of our products as a result of an inventory with a short expiration date that the Company had to sell with lower prices and due to an increase of inventory-storage expenses.

Selling expenses in fiscal year 2017 increased by 6.8% compared to fiscal year 2016 primarily due to an increase in salary expenses resulting from to the increase in personnel in the sales and trade department and due to an increase in distribution expenses related to the increase in sales. Selling expenses as a percentage of sales were 13.5%, equal to the selling expenses percentage in fiscal year 2016.

General and administrative expenses increased by 8.7% from fiscal year 2016 to NIS 15.8 million (US$ 4.6 million) compared to NIS 14.6 million (US$ 4.2 million). This was mainly due to a NIS 1.3 million (US$ 0.3 million) write-off in 2016 which was canceled in 2017, with respect to the Company’s estimated exposure to Mega Retail Ltd. debts.

As a result, operating profit for fiscal year 2017 decreased by 26.3% to NIS 16.8 million (US$ 4.8 million) compared to NIS 22.7 million (US$ 6.6 million) recorded in fiscal year 2016.

Income before taxes for fiscal year 2017 increased by 66.7% to NIS 27 million (US$ 7.8 million) compared to NIS 16.2 million (US$ 4.7 million) in fiscal year 2016.

Net profit for fiscal year 2017 increased by 94% to NIS 21 million (US$ 6.0 million), or NIS 1.58 (US$ 0.46) per share, from NIS 10.8 million (US$ 3.1 million), or NIS 0.82 (US$ 0.23) per share, in fiscal year 2016.

Willi-Food ended fiscal year 2017 with NIS 256.6 million (US$ 74 million) in cash and securities with no short-term debt. Net cash from operating activities in fiscal year 2017 was NIS 13.0 million (US$ 3.8 million). Willi-Food’s shareholders’ equity at the end of December 2017 was NIS 411.6 million (US$ 118.4 million).

Note regarding a notice of the end of Exclusive Distribution Agreement

On October 19, 2017, the Company’s wholly owned subsidiary, Gold Frost Ltd. (“Goldfrost”), received a notice from its Danish producer of dairy products, Arla Foods amba (“Arla”), to end their Exclusive Distribution Agreement effective as of December 31, 2017.

As announced by the Company on October 19, 2017, the termination of the Exclusive Distribution Agreement with Arla may have a significant negative impact on the Company’s operating results although the Company believes that it will be able to enter into agreements in the near future with alternative suppliers for a portion of the products currently purchased from Arla.

Representatives of Goldfrost and representatives of Arla have met several times and have agreed that Goldfrost may place new orders for additional dairy products produced by Arla to be sold by Goldfrost during the first half of 2018.

NOTE A: NIS to US$ exchange rate used for convenience only

The conversion from New Israeli Shekels (NIS) into U.S. dollars was made at the exchange rate as of December 31, 2017, on which U.S. $1.00 equaled NIS 3.467. The use of US$ is solely for the convenience of the reader.

NOTE B: IFRS

The Company’s consolidated financial results for fiscal year ended December 31, 2017 are presented in accordance with International Financial Reporting Standards (“IFRS”).

In terms of profitability, G. Willi-Food International Ltd. has a gross margin of 23.90%, an operating margin of 5.00% and a net profit margin of 2.60%. Return on assets come to 1.90% and return on investment coming to 4.50% while Return on equity come to 2.00%. The stock has recorded a weekly performance of 0.42% and monthly performance is 3.28%. Shares have moved 11.23% over the last quarter and changed 20.90% over the recent six months. The shares registered yearly performance at 13.68% and YTD move seen at 0.55%.

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