Strauss recalls chocolate products after salmonella fears

This morning, food company Strauss Group (TASE: STRS) announced a recall of chocolate products and the halting of production at its Elite factory in Nof Hagalil because of salmonella in samplings. Among the products recalled are Elite “Para” chocolate bars, “Pesek Zman” chocolate covered wafers, “Reva Lesheva”, and “Energy” chocolate covered rice crackers.

A few hours after announcing the recall and the closure of the factory, Strauss announced that another product was being added to the broad recall, namely chocolate flavored dairy dessert Milki Top with whipped cream, catalogue number 35902, barcode 7290104066016, with use by dates April 26, May 3, May 11, May 12, and May 16.

In its notification to the Tel Aviv Stock Exchange, Strauss said that it had decided on a recall of all chocolate products manufactured between February 20 and yesterday, when production ceased. The company added, “At the date of this report the company is unable to estimate the effect of the event on its results, but the event is likely to have a material impact on its profits for 2022.”

It emerges from the report that in routine inspections at the Elite chocolate factory, several samples containing salmonella were found on the production line and in the chocolate that serves as raw material for the products.

“The Food Service at the Ministry of Health was informed immediately,” Strauss said, “and in coordination with it and out of extra caution over the soundness of the products, the company decided on a recall of chocolate products with the following sell by dates… Strauss asks the public not to consume these products.” The company says that it is carrying out extensive measures to locate the source of the problem, assess its extent, and fix it, and that it will return to full distribution of its products when the production lines are safe.

Strauss Group’s share price is currently down 2.81%.

Last February, Strauss reported that it Sabra subsidiary, which sells hummus and dips in the US, had had to carry out a “program of adjustments” at its factory in Virginia. The background to this was a warning letter from the US Food and Drug Administration following an inspection at the Sabra factory in which salmonella was found in hummus samples.

Although Strauss Group reported a 16% rise in profit in 2021 to NIS 639 million, and revenue of NIS 8.75 million, the recall and the closure of the Virginia factory did affect its results. Strauss said in its financial report that the factory was expected to return to full production in the second quarter of this year. The impact on the group’s results is not expected to be material, but Sabra’s sales and profit for 2022 will show a decline. Strauss’s revenue from Sabra, of which it owns 50%, with PepsiCo owning the other 50%, fell 7.2% last year to NIS 595 million, while operating profit fell 45% to NIS 35 million.

In 2016-2017, Sabra’s revenue and operating profit fell sharply after a voluntary recall of its hummus products.

Published by Globes, Israel business news – en.globes.co.il – on April 25, 2022.

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