Sales increased by 4% year-over-year to $30.1m, and gross profit increased by 32.4% year-over-year to $11.4m. Net profit increased by 34.1% year-over-year, or 14.6% of sales.
Willi-Food markets and sells its food products to over 1,250 customers and 2,500 selling points in Israel and around the world including large retail and private supermarket chains, wholesalers and institutional consumers. The company's operating divisions include Willi-Food in Israel and Gold Frost, a wholly owned subsidiary that designs, develops and distributes branded kosher, dairy-food products.
The company said second-quarter revenues increased primarily due to a redirection of resources in favor of sales, increasing the variety of the company's products and improved inventory management.
Selling expenses increased by 9.8% in the second quarter of 2019 primarily due to an increase in payroll expenses in the logistics department as a result of working in two shifts to comply with government workplace restrictions due to the COVID-19 pandemic, and an increase of freight to customers' expenses to support sales growth.
The company said operating profit for the second quarter of 2020 increased by 71.3% to $4.9m in the second quarter of 2019.
At the beginning of the year as a result of the COVID-19 pandemic, capital markets recorded sharp declines and, as a result, the company said, it suffered a decline in the value of its portfolio of securities in the first quarter of 2020. Since that time, capital markets have recovered somewhat and as a result the company recorded gains from revaluation of its portfolio of securities of approximately $0.7m in the second quarter of 2020.
Income before taxes on income for the second quarter of 2020 was $5.8m compared to income before taxes on income of $4.1m in the second quarter of 2019.
First half fiscal 2020 summary
Willi-Food's sales for the six-month period ending June 30, 2020 increased by 17.8% to$67.3m compared to sales of $57.1m in the first half of 2019. Sales increased in the first half of 2020 primarily due to the COVID-19 pandemic, which led to an increase in demand for the company's products, primarily in retail chains, and due to a redirection of resources in favor of sales, increasing the variety of the Company's products and improved inventory management.
Gross profit for the period increased by 35% to $23.4m compared to gross profit of $17.3m for the first half of 2019. First half 2020 gross margin was 34.7% compared to a gross margin of 30.3% for the same period in 2019. The increase in gross profit was primarily due to the increase in sales and an increase in gross margin resulting from the company's strategy of selling a more favorable mix of products which generate a higher gross margin and credits received from suppliers.
Operating profit for the first half of 2020 increased by 59.8% reported in the comparable period of last year primarily due to the increase of gross profit.
Income before taxes for the first half of 2020 decreased by 36.1% to $6.3m compared to $9.9m in the first half of 2019.
Net profit for the first half of 2020 decreased by 39.5%.
Zwi Williger and Joseph Williger, co-chairmen of Willi-Food, said, "We are pleased to present strong second quarter 2020 financial results, which show stable growth in company sales and a significant improvement with all operational profit parameters.
“Since COVID-19 surfaced in China at the end of 2019 and reached many other countries worldwide, including Israel, there has been a substantial increase in demand for the company's products. This demand was especially strong in the first quarter of 2020, which led to a general decline in consumption in the second quarter of 2020.
“Despite this decline, the company managed to deliver a great performance with higher sales in the second quarter compared to the second quarter in 2019. In parallel with this development, the company added new and profitable products to its product portfolio to generate higher gross profit margin.
“We intend to maintain sufficient inventory levels and work to further strengthen the company's supply chain and product portfolio in the future in order to continue to improve our results."