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Salmonella not the only thing weighing on Strauss

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Investors on the Tel Aviv stock market have been seized by something of an anxiety attack in relation to food company Strauss Group (TASE: STRS) over the past couple of days. The share price hasn’t collapsed, but it has taken a sharp downturn in response to the salmonella scare at the company’s Elite chocolate factory. Some analysts see this reaction as more than a stomach ache.

Within two days, more than half a billion shekels have been wiped off Strauss’s market cap, with the share price dropping about 5%. Anyone who bought Strauss Group shares a year ago now shows zero return on the investment. The main casualty is of course the Strauss family (siblings Ofra, Irit, and Adi Strauss) which holds 57% of the company.

The trigger to the slide in Strauss’s share price is of course the salmonella discovered at the factory at Nof Hagalil. It looks, however, as though investors have been responding to other events at Strauss Group as well, with its international food business.

The salmonella episode has caught Strauss Group at a problematic business juncture, and follows other events of the past few months that have cast doubt on the company’s future performance.

Troubles at US unity Sabra too

Strauss Group is active in twenty countries, employs some 17,000 people around the world, and has a strong business base in Israel. According to Storenext, Strauss is the second largest food and beverages group in Israel in sales turnover terms, with 12.4% of the local market in 2021.

Subsidiary Strauss Coffee, Strauss Group states in its financials, is among the ten leading coffee companies in the world for market share. In 2021, the group’s consolidated sales turnover was NIS 8.7 billion, and since 2016 it has recorded 5.5% average annual sales growth.

Despite the good looking numbers, however, the current crisis at Strauss is one more in a series of events that cloud the picture. According to one market analyst who covers the company, the salmonella incident has the signs of a temporary glitch. The analyst, who prefers not to be named, says that the affair “could have an adverse effect on the company’s sales after production returns to normal, but incidents of this kind are passing episodes. Even if we bring to mind a much more serious event, such as the affair of the silicon in Tnuva milk in the 1990s, in the end, who stopped drinking milk? It didn’t really happen.”

Nevertheless, he says, “This crisis has caught Strauss in a challenging period, not just in its activity in Israel. The Sabra subsidiary (the US hummus and dips producer held in equal shares by Strauss and PepsiCo, H.S.) is in a weak period, and there too contaminants similar to salmonella were found by the US Food and Drug Administration, and not for the first time, at the end of 2021. Strauss halted hummus production at Sabra and entered upon a program of adjustments to the production process, which in any case since the outbreak of the coronavirus pandemic has suffered from supply chain problems.”




Strauss recently announced that it expected to end the first quarter of 2022 with a substantial loss at Sabra, estimated at NIS 26-45 million. It subsequently announced that the impact of the event would be more severe than it had estimated, because of the expense of implementing the adjustments program.

6% of sales to Russia and Ukraine

The war between Russia and Ukraine adds another negative influence on Strauss’s business. “The company is active in the coffee business in both Russia and Ukraine. That too has come to some kind of a halt because of the fighting,” the analyst says. In its annual financial statements for 2021, the company put sales to Russia and Ukraine at NIS 525 million, representing 6% of the group’s total sales.

“Of the sales to those two countries, most is to Russia (72%). The operating profit on the company’s business in both countries totaled NIS 37 million, representing 3.8% of the group total. The conflict, the volatility of ruble exchange rates and other factors have made it difficult for the company to estimate how events there will develop. But since we are only talking about a small fraction of the company’s business, the consequences will be limited.”

The analyst says that the salmonella incident, coupled with the crisis in Ukraine and Russia and what happened to the Sabra business in the US, has created a combined picture that appears to be the factor weighing on the stock. “Strauss is in a weak period at present. In the long term, the company is made up of such a wide range of activity that in my view it will be able to regain stability and overcome all the hits. But it looks as though in the end 2022 will be a weak year.”

Published by Globes, Israel business news – en.globes.co.il – on April 27, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.


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U.S. natgas futures drop 5% on rising output, milder forecasts

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U.S. natural gas futures fell about 5% on Friday as output slowly rises and on

forecasts for milder weather and lower demand over the next two weeks than previously expected.

That decline comes despite a jump in the amount of gas flowing to U.S. liquefied natural gas (LNG) export

plants to a near seven-week high following maintenance outages at some Gulf Coast plants.

Although the weather is expected to turn milder next week, it’s still hot in many parts of the country

now.

In the spot market, next-day power at the PJM West hub and gas at the Dominion South hub

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in Pennsylvania jumped to their highest since the February freeze in 2021 as homes and

businesses crank up air conditioners to escape the heat.

High air conditioning use also boosted peak power demand in Texas to a record for the month of May on

Thursday. The state’s grid operator forecast demand would likely break that record peak on Friday.

U.S. front-month gas futures for June delivery fell 37.9 cents, or 4.6%, to $7.929 per million

British thermal units (mmBtu) at 9:17 a.m. EDT (1317 GMT).

Despite Friday’s decline, the contract was still up about 4% for the week after falling about 5% last

week.

Gas was trading around $28 per mmBtu in Europe and $22 in Asia. The U.S. contract

rose to a 13-year high near $9 on May 6.

U.S. futures lag far behind global prices because the United States is the world’s top producer, with all

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the gas it needs for domestic use while capacity constraints inhibit exports of more LNG.

Data provider Refinitiv said average gas output in the U.S. Lower 48 states climbed to 94.9 billion cubic

feet per day (bcfd) so far in May from 94.5 bcfd in April. That compares with a monthly record of 96.1 bcfd in

November 2021.

Refinitiv projected average U.S. gas demand, including exports, would hold near 89.7 bcfd this week and

next before sliding to 88.7 bcfd in two weeks.

The average amount of gas flowing to U.S. LNG export plants rose to 12.3 bcfd so far in May from 12.2 bcfd

in April. That compares with a monthly record of 12.9 bcfd in March. The United States can turn about 13.2

bcfd of gas into LNG.

On a daily basis, however, LNG feedgas was on track to hit a near seven-week high of 13.3 bcfd on Friday.

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Since the United States will not be able to produce much more LNG soon, it has worked with allies to

divert exports from elsewhere to Europe to help European Union (EU) countries and others break their

dependence on Russian gas after Russia’s Feb. 24 invasion of Ukraine.

Russian gas exports to Europe rose to around 8.1 bcfd on Thursday from about 7.8 bcfd on Wednesday on the

three mainlines into Germany: North Stream 1 (Russia-Germany), Yamal (Russia-Belarus-Poland-Germany) and the

Russia-Ukraine-Slovakia-Czech Republic-Germany route. That compares with an average of 11.9 bcfd in May 2021.

Gas stockpiles in Northwest Europe – Belgium, France, Germany and the Netherlands – were

about 14% below the five-year (2017-2021) average for this time of year, down from 39% below the five-year

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norm in mid-March, according to Refinitiv. Storage was currently about 37% of full capacity.

That is healthier than U.S. inventories, which were around 15% below their five-year norm, because high

European gas prices have kept LNG imports strong while Russia keeps supplying fuel via pipeline.

Week ended Week ended Year ago Five-year

May 20 May 13 May 20 average

(Forecast) (Actual) May 20

U.S. weekly natgas storage change (bcf): +95 +89 +109 +97

U.S. total natgas in storage (bcf): 1,827 1,732 2,199 2,139

U.S. total storage versus 5-year average -14.6% -15.2%

Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year

Last Year Average Average

2021 (2017-2021)

Henry Hub 7.94 8.31 2.96 3.73 2.89

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Title Transfer Facility (TTF) 28.05 27.88 8.88 16.04 7.49

Japan Korea Marker (JKM) 21.79 21.17 9.65 18.00 8.95

Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days

Two-Week Total Forecast Current Day Prior Day Prior Year 10-Year 30-Year

Norm Norm

U.S. GFS HDDs 36 31 43 49 44

U.S. GFS CDDs 128 132 86 96 102

U.S. GFS TDDs 164 163 129 145 146

Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Week Next Week This Week Five-Year

Last Year Average For

Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production 95.2 95.1 95.1 92.0 83.9

U.S. Imports from Canada 7.9 7.6 7.9 7.2 7.6

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1

Total U.S. Supply 103.2 102.7 103.0 99.2 92.6

U.S. Demand (bcfd)

U.S. Exports to Canada 2.9 2.8 2.7 2.1 2.1

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U.S. Exports to Mexico 6.2 6.2 6.2 6.1 4.8

U.S. LNG Exports 12.2 12.2 13.1 10.5 5.1

U.S. Commercial 6.0 5.0 5.1 4.9 5.6

U.S. Residential 7.0 4.7 4.8 4.7 6.7

U.S. Power Plant 28.2 31.4 30.3 25.4 26.0

U.S. Industrial 21.0 20.7 20.9 21.4 20.9

U.S. Plant Fuel 4.7 4.7 4.7 4.7 4.6

U.S. Pipe Distribution 1.8 1.8 1.8 1.8 1.8

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total U.S. Consumption 69.0 68.5 67.7 63.0 65.7

Total U.S. Demand 90.3 89.6 89.7 81.7 77.7

U.S. weekly power generation percent by fuel – EIA

Week ended Week ended Week ended Week ended Week ended

May 20 May 13 May 6 Apr 29 Apr 22

Wind 11 15 13 16 16

Solar 4 4 4 4 4

Hydro 7 7 7 7 7

Other 2 2 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 38 34 36 33 33

Coal 20 18 19 19 19

Nuclear 19 19 20 19 19

SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)

Hub Current Day Prior Day

Henry Hub 8.21 8.53

Transco Z6 New York 7.82 7.75

PG&E Citygate 9.78 9.98

Dominion South 7.62 7.55

Chicago Citygate 7.93 8.08

Algonquin Citygate 7.94 8.04

SoCal Citygate 8.19 8.68

Waha Hub 7.33 8.01

AECO 4.58 6.41

SNL U.S. Power Next-Day Prices ($ per megawatt-hour)

Hub Current Day

New England 70.00 78.75

PJM West 153.50 131.75

Ercot North 80.00 77.75

Mid C 18.25 19.19

Palo Verde 37.50 41.00

SP-15 51.25 53.00

(Reporting by Scott DiSavino; Editing by Kirsten Donovan)

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Sri Lanka Hunts For Cash To Pay Oil Traders For Crude And Fuel

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Unloading procedures for one cargo of gasoline have begun but the ship cannot berth yet because there’s no space for it to do so, according to the harbor master at the port of Colombo. Meanwhile, Prime Minister Ranil Wickremesinghe said the government is also trying to find the cash to complete a rare purchase of crude oil from Russia.

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EPFO adds 15.32 lakh net subscribers in March

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Retirement fund body EPFO has added 15.32 lakh subscribers in March 2022, over 19 per cent more than 12.85 lakh enrolled in February this year.
The provisional EPFO payroll data released on Friday highlighted that it has added 15.32 lakh net subscribers in March 2022, a labour ministry statement said.

According to the statement, a month-on-month comparison of payroll data shows an increase of 2.47 lakh net subscribers in March 2022 compared to the net additions during February 2022.

Of the total 15.32 lakh net subscribers added during the month (of March), around 9.68 lakh new members have been covered under the provisions of EPF & MP Act, 1952 for the first time.

The new member addition has increased by 81,327 in March 2022 as compared to the previous month. Approximately 5.64 lakh net subscribers exited but re-joined the establishments covered under the EPFO by transferring their funds from the previous PF account to the current account, instead of opting for final withdrawal.

Age-wise comparison of payroll data showed that the age group of 22-25 years has been on the forefront by registering the highest number of net enrolments, with 4.11 lakh additions during March 2022.

This is followed by the age group of 29-35 with an addition of 3.17 lakh net subscribers. The age group of 18-21 years also added around 2.93 lakh net subscribers during the month.

The age group of 18-25 years constitutes around 45.96 per cent of net subscribers addition during the month.
Age-wise payroll data also indicated that many first-time job seekers are joining the organised sector workforce in large numbers.

State-wise comparison of payroll figures highlighted that the establishments covered in Maharashtra, Karnataka, Tamil Nadu, Gujarat, Haryana and Delhi remain in lead by adding approximately 10.14 lakh net subscribers during the month, which is 66.18 per cent of the total net payroll addition across all age groups.

Gender-wise analysis showed that net female payroll addition is approximately 3.48 lakh during the month. The share of female enrolment is 22.70 per cent of total net subscribers addition during March 2022, with an increase of 65,224 net enrolments over February 2022.
The participation of women in the organised workforce is showing a positive trend from October 2021.

Industry-wise payroll data indicates that mainly two categories of ‘expert services’ (consisting of manpower agencies, private security agencies and small contractors etc) and ‘trading-commercial establishments’ constitute 47.76 per cent of total subscriber addition during the month.
A growing trend in net payroll addition has been noted in industries like textiles, heavy-fine chemicals, hotels & restaurants etc in March 2022 compared to net subscriber addition in February 2022.

The payroll data is provisional since the data generation is a continuous exercise and the process of updating employee records is done on a regular basis.
Hence, the statement said that the previous data gets updated every month. Since April 2018, EPFO has been releasing payroll data, covering the period September 2017 onwards.

EPFO is the country’s principal organisation responsible for providing social security benefits to the organised/semi-organised sector workforce covered under the the purview of EPF & MP Act, 1952.

It offers members a myriad of services, which includes provident fund, insurance and pension both for members and their families.

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