G. Willi-Food Reports Financial Results for the Second Quarter and First Six Months...

G. Willi-Food Reports Financial Results for the Second Quarter and First Six
Months of 2008
Results Include One Time Expenses Related to the Closing Down of WF Laish
Israeli and to Final Arbitration Award Entered Against the Company in Vitarroz
Arbitration

YAVNE, Israel, August 27 /PRNewswire-FirstCall/ -- G. Willi-Food
International Ltd. (NASDAQ: WILC) (the "Company" or "Willi Food"), one of
Israel's largest food importers and a single-source supplier of one of the
world's most extensive ranges of quality kosher food products, today
announced its unaudited financial results for the second quarter and first
six months ended June 30, 2008. Second Quarter Fiscal 2008 Summary

- 41.7% increase in sales over second quarter 2007

- 27.3% increase in gross profit over second quarter 2007

- Operating loss of NIS 1.4 million (US $0.4 million) compared
to operating income of NIS 2.8 million (US $0.8 million) in second
quarter 2007, mainly as a result of approximately NIS 4.6 million (US
$1.4 million) expense in connection with the closing down of WF Laish
(approximately NIS 2.6 million, US $0.8 million) and as a result of a
final arbitration award entered against the Company in the Vitarroz
arbitration (approximately NIS 2.0 million, US $0.6 million) described
below.

Revenues for the second quarter of fiscal 2008 increased by 41.7% to NIS
79.0 million (US $23.6 million) compared to revenues of NIS 55.8 million (US
$16.6 million) in the second quarter of 2007. Willi-Food's organic growth in
the home market of Israel and sales from each of the Company's subsidiaries
has been particularly strong through the half year. The Company now consists
of Willi-Food, Gold Frost, the Baron joint venture, Danish dairy distributor
and Shamir Salads. Sales synergies and the wide product mix that each of
these divisions provide to the Company's network of distribution channels is
gaining momentum. In addition, as a result of broader distribution, sales
generated from most of the subsidiaries have surpassed expectations of
Willi-Food. To date, the only underperforming subsidiary of the Company has
been WF Kosher Food Distributors Ltd. - Laish Israeli ("WF Laish"), whose
operations were recently shut down.
Gross profit for the second quarter of 2008 increased by 27.3% to NIS
16.8 million (US $5.0 million) compared to gross profit of NIS 13.2 million
(US $3.9 million) in the second quarter of 2007. Second quarter gross margin
was 21.2% compared to 23.6% for the same period in 2007. The price of global
food commodities has remained volatile during the year to date. However,
despite the effects of global inflationary costs on food production and
supply, Willi-Food expects to maintain its historical gross margins through
the full fiscal year by maintaining tight controls of its cost of sales.
Mr. Zwi Williger, President and COO of Willi-Food commented, "Second
quarter results were strong despite the current operating environment
affecting global food manufacturers and distributors. While consumers and
manufacturers alike have acclimated to the global inflationary rise in food
costs, we do not believe that the cost of food will stabilize in the near
future. In light of this, Willi-Food's solid top line growth reflects the
synergies found in bringing together a broad range of premium kosher products
to our internal and external distribution channels. We will continue to work
on diversifying our product base, expanding our distribution channels and
maintaining control of our cost of sales."
Willi-Food's operating loss for the second quarter of 2008 was NIS 1.4
million (US $0.4 million) compared to operating income of NIS 2.8 million (US
$0.8 million) reported in the comparable quarter of last year. Second quarter
selling expenses as a percentage of revenues decreased to 10.7% compared to
11.3%. In addition, general and administrative expenses as a percentage of
revenue increased to 9.8% from 7.3% as a result of the transitional
activities related to the closing down of WF Laish, in the amount of
approximately NIS 2.6 million (US $0.8 million). An additional expense is
related to a final arbitration award entered against the Company for damages
in the amount of NIS 2.0 million ($0.6 million) to be paid to Vitarroz in
connection with litigation initiated by Vitarroz in 2005, described below. We
expect these percentages to be in line with historical trends when we report
results for the third quarter of fiscal 2008.
Willi-Food's second quarter 2008 loss before taxes was NIS 1.1 million
(US $0.3 million) compared to income before taxes of NIS 3.4 million (US $1.0
million) recorded in the second quarter of 2007. Second quarter 2008 net loss
was NIS 1.4 million (US $0.4 million), or NIS -0.19(US$ -0.06) per share
compared to a net income of NIS 3.2 million (US $0.95 million), or NIS
0.23(US$0.07) per share, recorded in the second quarter of 2007.
Willi-Food ended the quarter with NIS 79.1 million (US $23.6 million) in
cash and securities and approximately NIS 14.1 million (US $4.2 million) in
short-term debt.
Six-Month Results
Willi-Food's revenues for the six-month period increased by 45.8% to NIS
185.5 million (US $55.3 million) compared to revenues of NIS 127.2 million
(US $38.0 million) in the first half of 2007. Gross profit for the period
increased 38.6% to NIS 46.8 million (US $14.0 million) compared to gross
profit of NIS 33.8 million (US $10.1 million) for the six month period in
2007. First half gross margins were 25.2% compared to gross margins of 26.6%
in the same period in 2007.
Operating income for the first half of 2008 increased by 3.9% to NIS 13.4
million (US $4.0 million) from NIS 12.9 million (US $3.9 million) reported in
the comparable period of last year. First half 2008 income before taxes was
NIS 12.0 million (US $3.6 million) compared to NIS 12.4 million (US $3.7
million) recorded in the first half of 2007. Net income for the first half of
2008 was NIS 8.2 million (US $2.5 million), or NIS 0.64 (US $0.19) per share
compared to net income for the first half of 2007 of NIS 9.6 million (US $2.9
million), or NIS 0.73 (US $0.22) per share.
Arbitration Award
As previously disclosed, the Company (and related parties) and Vitarroz
Corp. agreed to submit their claims relating to alleged breach of contract
and related claims to an arbitration panel. On August 25 2008, the
arbitration panel has granted an award against the Company in the amount of
approximately NIS 2.0 million (US $0.6 million). Among other things, the
panel found that the press release issued by the Company announcing the
termination of the proposed acquisition of the Vitarroz business by the
Company constituted a breach of contract and violation of the covenant of
good faith and fair dealing. In addition, the panel rejected the Company's
counterclaims. As the Company did not expect the arbitration panel to enter
an arbitration award against it, the Company did not reserve any amounts for
this award. The Company is currently evaluating its legal options with
respect to this matter with its legal advisers.
Outlook
Mr. Williger commented, "Willi-Food's diversification strategy is
working. Our top line growth is a reflection of the synergies we have created
to channel the broad range of products coming from our own sourcing and that
of our subsidiaries."
"We have been able to grow revenues and contain costs to an acceptable
degree despite the immediate challenges pertaining to food commodities
currently exceeding global inflation rates. This was made possible through
diversification, as each operating company in the Willi-Food family produces
a different product range to be channeled into our growing distribution
network.
"The foreseeable challenges ahead will be in managing the volatile cost
of our product base, which can vary monthly. While consumers are accepting of
the increase in food costs, rapid changes to our product pricing would lead
to attrition of our customer base both in the retail and wholesale markets.
With the closing of WF Laish in the US, we are carefully reviewing our merger
and acquisition strategy. The US, however, remains a strategic region of
interest for Willi-Food, and for now, we are objectively seeking potential
partnerships to distribute our products with distributors who wish to grow
their volume and diversify their line of premium kosher products. Our line of
products includes over 600 exclusively distributed products by Willi-Food and
Shamir Salads."
Mr. Williger continued, "The results of this reporting quarter were
impaired by NIS 2.6 million (US $0.8 million) in expenses related to the
closing down of WF Laish, and to a final arbitration award entered against
the Company in the amount of NIS 2.0 million (US $0.6 million) in connection
with litigation initiated by Vitarroz in 2005. The balance sheet is now
currently clean and we anticipate moving forward with the progress of
Willi-Food."
Mr. Williger concluded, "We had hoped to provide guidance for the
remainder of the fiscal year, but we will not be able to do so because
commodity and food prices remain in a state of flux, and change from month to
month. However, we still believe that the Company is on track to end the full
fiscal year profitable and expect to grow 2008 sales to be in excess of NIS
330 million (US $100 million). We look forward to discussing our results in
more detail in our conference call."
The Company will host a conference call to discuss results on August 27,
at 11:00 AM Eastern. Interested parties may participate in the conference
call by dialing 877-407-8035 (US), or 201-689-8035 (International) 5-10
minutes prior to the start of the call. A replay of the conference call will
be available from 5:00 PM EDT on August 29 through 11:59 PM EDT on September
29, by dialing 877-660-6853 (US), or 201) 612-7415 (International), and
entering passcode #286 and conference ID# 295002 thereafter. A webcast link
of the live and archived conference call will be available on the day of the
call by following this link:
http://investor.shareholder.com/media/eventdetail.cfm?mediaid=33003&c=WIL
C&mediakey=6A44836CE77792E569B604911D6D683A&e=0
(Note sometimes for the link to work you must copy and paste the link
from two lines onto one URL of your browser.)
About G. Willi-Food International Ltd.
G. Willi-Food International Ltd. is one of Israel's largest food
importers and a single-source supplier of one of the world's most extensive
ranges of quality kosher food products. It currently imports, markets and
distributes more than 2,500 food products manufactured by some 120 top-tier
suppliers throughout the world to more than 2,000 customers. Willi-Food
excels in identifying changing tastes in its markets and sourcing
high-quality kosher products to address them. The Company also operated
several subsidiaries: Gold Frost Ltd. subsidiary develops and distributes
kosher chilled and frozen dairy food products internationally together with
its Danish dairy distributor subsidiary; joint venture with the Baron Family
engage in the global import, export and distribution of kosher products
worldwide; and Shamir Salads is a leading international distributor of
pre-packaged Mediterranean foods. For more information, please visit the
Company's website at http://www.willi-food.co.il.
This press release contains forward-looking statements within the meaning
of safe harbor provisions of the Private Securities Litigation Reform Act of
1995 relating to future events or our future performance, such as statements
regarding trends, demand for our products and expected revenues, operating
results, and earnings. Forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause our actual results,
levels of activity, performance or achievements to be materially different
from any future results, levels of activity, performance or achievements
expressed or implied in those forward-looking statements. These risks and
other factors include but are not limited to: changes affecting currency
exchange rates, including the NIS/U.S. Dollar exchange rate, payment default
by any of our major clients, the loss of one of more of our key personnel,
changes in laws and regulations, including those relating to the food
distribution industry, and inability to meet and maintain regulatory
qualifications and approvals for our products, termination of arrangements
with our suppliers, in particular Arla Foods, loss of one or more of our
principal clients, increasing levels of competition in Israel and other
markets in which we do business, changes in economic conditions in Israel,
including in particular economic conditions in the Company's core markets,
increases in milk, wheat, corn, rice and other product prices, our inability
to accurately predict consumption of our products and risks associated with
product liability claims. We cannot guarantee future results, levels of
activity, performance or achievements. The matters discussed in this press
release also involve risks and uncertainties summarized under the heading
"Risk Factors" in the Company's Annual Report on Form 20-F for the year ended
December 31, 2007, filed with the Securities and Exchange Commission. These
factors are updated from time to time through the filing of reports and
registration statements with the Securities and Exchange Commission. We do
not assume any obligation to update the forward-looking information contained
in this press release.
NOTE A: Convenience Translation to Dollars
The convenience translation of New Israeli Shekels (NIS) into U.S.
dollars was made at the rate of exchange prevailing on June 30, 2008: U.S.
$1.00 equals NIS 3.352. The translation was made solely for the convenience
of the reader.
NOTE B: IFRS
The Company's consolidated financial results are presented in accordance
with International Financial Reporting Standards ("IFRS"). In prior years the
Company prepared its financial reports in accordance with generally accepted
accounting principles in Israel ("IL GAAP"). The Company recasted the
comparative amounts included in this financial results to IFRS.
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, December 31, June 30, December 31,
2008 2007 2008 2007
NIS US dollars (*)
(in thousands)
ASSETS
Current assets
Cash and cash equivalents 46,712 61,649 13,936 18,391
Marketable securities 32,413 31,267 9,670 9,328
Trade receivables 77,188 63,728 23,027 19,012
Other receivables and 9,406 4,374 2,806 1,305
prepaid expenses
Inventories 33,469 29,166 9,985 8,701
Total current assets 199,188 190,184 59,424 56,737

Fixed assets
Cost 54,447 44,569 16,243 13,296
Less: accumulated 11,658 8,355 3,478 2,492
depreciation and
amortization
42,789 36,214 12,765 10,804

Other assets, net 22,105 13,069 6,595 3,899

264,082 239,467 78,784 71,440

LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities
Short-term loans 14,053 5,978 4,193 1,783
Trade payables 40,981 33,961 12,226 10,132
Related parties 2,475 3,945 738 1,177
Other payables and 13,527 3,655 4,035 1,090
accrued expenses
Total current 71,036 47,539 21,192 14,182
liabilities

Long term liabilities
Long term loan 953 - 284 -
Deffered tax 38 118 11 35
Accrued severance pay 598 163 179 49
Total long term 1,589 281 474 84
liabilities

Warrants to issue shares 101 1,040 31 310

Shareholders' equity
Ordinary shares NIS
0.10 par value
(authorized -
50,000,000
shares, issued and
outstanding
- 10,267,893 shares 1,113 1,113 332 332
Additional paid-in 59,056 59,056 17,618 17,618
capital Capital fund 247 - 74 -
relating to Goodwill
Foreign currency (863) (414) (257) (123)
translation reserve
Retained earnings 118,842 112,233 35,454 33,482
Minority Interest 12,961 18,619 3,866 5,555
191,356 190,607 57,087 56,864

264,082 239,467 78,784 71,440

(*)Convenience translation into U.S. dollars

G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Six months Three months
ended June 30,
2008 2007 2008 2007
NIS
In thousands (except per share and share data)

Sales 185,481 127,216 79,036 55,771
Cost of sales 138,659 93,439 62,271 42,601

Gross profit 46,822 33,777 16,765 13,170

Selling 17,538 12,316 8,436 6,312
expenses
General and
administrative
expenses 13,901 8,566 7,752 4,088

Other (Income)
Expense 1,981 (9) 1,981 (9)

Total
operating
expenses 33,420 20,873 18,169 10,391

Operating
income
(Expense) 13,402 12,904 (1,404) 2,779

Financial 2,026 2,534 1,207 1,743
income
Financial 3,465 3,025 936 1,143
expense

Income 11,963 12,413 (1,133) 3,379
(expense)
before
taxes on
income

Taxes on 3,750 2,861 312 193
income

Income after 8,213 9,552 (1,445) 3,186
taxes on
income

Related to:
Company 6,609 7,455 (1,986) 2,332
Shareholders'
Minority 1,604 2,097 541 854
interest

Net income 8,213 9,552 (1,445) 3,186

Earnings per
share data:

Earnings per
share:

Basic 0.64 0.73 (0.19) 0.23

Diluted 0.64 0.73 (0.19) 0.23

Shares used in
computing
basic and
diluted
earnings per
ordinary
share: 10,267,893 10,267,893 10,267,893 10,267,893

G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Continued.........

Six months
ended June 30,
2008 2007
US dollars (*)
In thousands (except per share and share data)

Sales 55,334 37,952
Cost of sales 41,366 27,876

Gross profit 13,968 10,076

Selling 5,232 3,674
expenses
General and
administrative
expenses 4,147 2,555

Other (Income)
Expense 591 (3)

Total
operating
expenses 9,970 6,226

Operating
income
(Expense) 3,998 3,850

Financial 605 756
income
Financial 1,034 902
expense

Income 3,569 3,704
(expense)
before
taxes on
income

Taxes on 1,119 854
income

Income after 2,450 2,850
taxes on
income

Related to:
Company 1,972 2,224
Shareholders'
Minority 478 626
interest

Net income 2,450 2,850

Earnings per
share data:

Earnings per
share:

Basic 0.19 0.22

Diluted 0.19 0.22

Shares used in
computing
basic and
diluted
earnings per
ordinary
share: 10,267,893 10,267,893

(*) Convenience translation into U.S. dollars

Company Contact:
G. Willi-Food International Ltd.
Ety Sabach, CFO
+972-8-932-1000
ety@willi-food.co.il

IR Contact:
Grayling Global
Christopher Chu
+1-646-284-9426
cchu@hfgcg.com

SOURCE G Willi Food International

Company Contact: G. Willi-Food International Ltd. Ety Sabach, CFO,
+972-8-932-1000, ety@willi-food.co.il; IR Contact: Grayling Global,
Christopher Chu, +1-646-284-9426, cchu@hfgcg.com