G. Willi-Food International Ltd. (WILC), one of our favorites here at Israelnewsletter.com, reported a 21% increase in revenues for Q3 ‘07 versus the same quarter ‘06. As expected profit decreased as the company suffered from a drop in margins. The worldwide increase in dairy prices impacted G. Willi’s Q3 gross margins, as they declined to 20% compared to 27% in the same period a year ago.
Mr. Zwi Williger, President and COO of Willi-Food commented,
Third quarter results are in line with our expectations for the period. In this period, nearly all of our shortfalls can be attributed to gross margin decline in our dairy business. As previously stated, Willi Food and the global dairy industry continues to experience cost pressures due to weather related problems, reduced milk production, cessation of EU dairy export subsidies at the same time that consumption and demand for dairy has increased in growing emerging markets. These factors have negatively impacted Willi Food’s near term sales and gross margins on cheeses and other products.
Mr. Williger continued,
While we believe that this trend shall continue through the remainder of the year, we anticipate that the cost of raw food materials will stabilize by mid-2008. In the interim, we are successfully leveraging our infrastructure, hedging our strategic direction through smart acquisitions and setting the stage for growth in 2008.
The company continues to grow, and we continue to like this for the long-term. With limited volume, the stock price is subject to large swings, so long-term investors should keep their eyes focused on the long-term regarding this stock. As the company continues to execute its business plan, I would expect the stock to continue to move up.
Disclosure: The author has a position in WILC, but he holds no position in any other stock mentioned, as of November 29, 2007.