Strauss Group Ltd. (STRS) Earnings Call Transcript & Summary

Hi, everyone, and thank you for joining us today. Apologies for the slight delay. Welcome to Strauss Group Fourth Quarter and Fiscal Year 2022 Results Virtual Conference. Following management's formal presentation, we will conduct a Q&A session. [Operator Instructions] As a reminder, this online Zoom conference is being recorded today, Thursday, March 23, 2022 (sic) [ 2023 ]. I would like to remind everyone that this online webinar may contain projections or other forward-looking statements regarding future events or the future performance of the company. These statements are only predictions and may change as time passes. Strauss does not assume any obligation to update that information. Actual events or results may differ materially from those projected, including as a result of changing industry and market trends, reduce demand for our product, the timely development of our new products and their adoption by the market, increased competition in the industry and price reductions as well as due to risks identified -- as identified in the documents filed by the company with the Israeli Securities Authority. Online with me today are Mr. Shai Babad, our CEO of Strauss Group; Mr. Ariel Chetrit, Group CFO; and myself, Daniella Finn, Director of Investor Relations. As usual, we shall start with the recap of the quarterly results by CEO Shai Babad and then move on to the financial highlights of the quarter presented by CFO, Ariel Chetrit. Shai, please go ahead.

Hello, everybody. Would you share the presentation on the...

Ariel, if you'd like to share the presentation, please?

There you go. Thank you very much. First of all, it's a very nice meeting you all. Hopefully, we'll get to do that in person in the future. My name -- I'll introduce myself a little bit. My name is Shai Babad. I'm being the new CEO for the past 4 months here in Strauss. Before that, I was the CEO of Blue Square Holding company here in Israel. And before that, I was the Director General of the Ministry of Finance of Israel responsible for the budget and the economic reforms of the Financial Ministry here in Israel for more than 5 years. I've started my professional life in the private sector working as a strategic consultant and working at Apex as a consultant as well in the venture capital. And I had spent 8 years in ZIM shipping company, I did -- there I had, I was in 2 major positions. The first one was the head of the Budget and Economy division in ZIM and the second was the CEO, of ZIM Israel and Near East responsible for the activity of ZIM in Israel and 23 countries in the Mediterranean in Eastern Europe. So that's my professional life. In my personal life, I'm happily married to [indiscernible]. She got a trophy to be married to me. And I have 3 daughters at the age of 7, 5, 1.5 years. That means that for the past 7 years, they haven't slept a lot at night, and I'm now negotiating the fourth with my wife. Unfortunately, it doesn't seem that it's going to happen since I'm loosing this negotiation. So that's a little bit about me. Talking about 2022, and I thought that I'll just share with you the major stories that I've seen in 2022 and what happened to us this year, and then Ariel will go through the -- deeply through the results, and then we can open up for some questions. So Ariel, can you move to the next slide. Thank you. So the first thing I think that I was very influential into 2022 is us, Strauss defining our journey. We define that our purpose is nourishing a better tomorrow. And we said that everything we're going to do, every action that we take, every business opportunity we pursue, our strategy is going to be driven from that purpose of nourishing a better tomorrow. I think that would what happened to our data around in 2022, we actually implemented that purpose of how we nourish a better tomorrow with hand in the recall and everything that happened to us in as well. But I thought that I should stop this decade and point this out because I think this is a major path and a major combat for everything that we have been doing in 2022 and also everything we are going to do in the future. Next. So we can't talk about 2022 without talking about the recall. I think one of the major things that affected our results, if you look at our results, which we published today, so our net revenue grew to ILS 9.5 billion in 2022, which is a 6.5% growth. But on the other hand, our net profit declined by 73% to ILS 174 million. You can't talk about this decrease in profit without mentioning what happened to us in our confectionery, but in [ Nof Hagalil ], the North of Israel. This, of course, impacted our results by approximately ILS 300 million in net profit. You can see the drop in market share, which has happened to us during 2022 and the time it took us to get back. The good news are that in looking into 2023, you can see already that in March 2023, we managed to gain back our market share back to 24%, whereas the market share was 28% before the recall. So we always there, we almost got back to where we were, and this has been a very good sign because the factories only been working for 3.5 months, and we've been managing to get back on the shelf. Rather quickly, much better than we expected. But unfortunately, this, of course, affected us in 2022. Next. The second big story about 2022 is, of course, Sabra. Sabra had consequent of effects, which was started with the FDA layer and then carried on with the pipe posting and causing all the damage in the factory. And all the -- refurbishing that we needed to do in the plant there. The meaning of that was then, of course, for a couple of months, the activity was shut down, and then we slowly, slowly try to get there. Unlike the confectionery, this has been a gradual and slow getting back. We managed to get back to 37%, already, almost 38% in February, and this has been increasing slowly. We got back to being #1 in the market, still a long way to go before those events, we were more than 60% market share, and we still have a long way to go going back. And this, of course, affected our results with $64 million loss, our share is 50% out of that, which is approximately ILS 105 million which affect our net profit results. The third thing that affected our profit results was our capital gains from [indiscernible] FoodTech activity, our investments in the companies of the [indiscernible], Kitchen, as we call it in english and we had a lot of profit in 2021 through their -- through they're raising -- fund raising through the rounds that they did. And in 2022, we didn't have such round. So of course, the profit went down as well and those catering issues the confectionery, Sabra and our kitchen activity, effective most of our net profit there, that's why you see the decline. Another thing which affected us on the next slide is, of course -- no, no, next slide. Next thing which affected us, of course, is the economic turbulence, the macroeconomic conditions have been changing drastically. As you can see, inflation has been picking up everywhere in all the geographies that we are -- we have activity in or that we are operating in, Israel, U.S., Brazil, Russia, United Kingdom and China. And all of them, you can also see what happens to the interest rates, in Israel, just -- the basic rate just to 0.1% to 4.25%, and that has a tremendous effect on our activity. And also, you can see the cost of raw materials, what happened to raw materials in coffee, which are will go deep in just a second with regards to this presentation. But you can see that affected our results, especially here in Israel where we can't do a recovery on the price increase, but it also affected very good results that we had in Brazil, with the price increases that we have done there. And you can see also raw materials on milk cost here in Israel, which grows a lot as well and our ability to cover up those costs was also limited and of course, also affected our results. Next, please. So looking at price increase. So overall, in our international activity, whether it's Brazil, Europe, China, U.S., we have managed to gain back, especially in Brazil and Europe. We've made managed to gain back all those price increases by our price increase. So inflation that hit us were actually covered by the price increases that we have made for approximately ILS 780 million of prior inflation that we have encountered. And we administer raise prices by approximately ILS 1 billion. But the story of the inflation is mostly here in Israel, whereas the impact was approximately ILS 300 million in those years. But we only managed to raise by 2.9%, which covers only a small portion part of that impact, and we will need to go through a very extensive. We already started in 2022, and we are continuing in 2023 to go through very, very expensive productivity plans in order to make sure that on the one hand, there were price rise that was done in December, we implemented in 2023 and will have its impact on 2023 results. But on the other hand, because the price increase is not enough, we will need to go through very extensive productivity plans and targets to make sure that in 2023, we can cover all the inflation that will hit us. Next. Just looking inside to what we have done internally. So we also launched our strategy -- our growth strategy in 2023. The growth strategy was broken down into 3 sectors: renew the core, expand geographically and build new horizon. So when we look at renew the core, we looked at the activity which we wanted to divest from -- we did divest from Obela from Central Europe sell activities -- activity. And from that, we have divested. We're also looking at very much productivity and how to optimize our portfolio, and this is a lot of work that has been started in 2022 and we carried it through 2023. In expanding our geography, expanding our activities. So we are trying to find the categories that are adjacent to the core that we're expanding it. For instance, in Israel, we are doing the plant-based activity, which grew -- started to grow in 2022 and will continue to grow in 2023. And we also have some activity in China and in Tres Coracoes in Brazil categories that which we are going into. When we're looking into build activities, of course, Kitchen 2.0, the second round of kitchen and FoodTech investments that we are going through. But we also launched the unit inside Strauss help us build new businesses. And right now, we are looking into the new trends of milk without [indiscernible]. Milk without cow, that's a transaction basically.

[indiscernible]. Cow is milk.

[indiscernible]. Actually , cow is milk. That's the opposite. Yes. Cow is milk, which means that we are producing a protein of milk without actually using real cows. This is what future trends are going, and we are very much investing into that. Looking into the transforming. One of the things that we say in our strategy is how we transform the way we operate. So we've changed the structure that we operate in. We decided that in order to tackle all like external obstacles that are coming in our way. We need to, one, become very much customer-centric with all the competition that is raising here in Israel. So we changed the structure of how we operate. We builded a new department, operational department on the CEO, which will carry through all the productivity that we need to do and also drives into operational excellence. And that was done under the Deputy CEO, which the responsible for all our operational activity from the supply chain logistics procurement and, of course, manufacturing. And on the other hand, we've taken Strauss Israel to be more focused, more dedicated into the outside into the market being much more customer centric, and we've made some changes in the management as well in the way the management is operating with a lot of -- some, we say a lot, but some promotions, all of them done internally from people who have been already in our group. Next. We also don't forget that in 2022, we also looked a little bit about innovation as well. So I mentioned Strauss NEO. There was also a very large FoodTech conference here in Israel, which more than 2,000 people have attended, 70 companies and 600 guests from abroad. This, of course, has been the main event of FoodTech environment and ecosystem here in Israel. As I said before, we also launched the Kitchen, but we also had some portfolio innovation, looking into the plant-based note that I talked before, our productivity, which has grown substantially. And also looking into serving generation has having the yogurt for multi, which is for deteriorate, addressing their needs and redemand which they need and also 'My first yogurt' for the young age. Just looking hard to bring the specific product into the specific generations. We also looked at special communities and consumer needs with having accessible packaging for our Tapuchips, for our snacks and also reducing a lot of allergens that we had in our products. Next, we can't talk about 2022 without mentioning the fact, although the results were hit by a large decrease in net profit. We still managed to get that profit and we still managed to grow by 6.5% because of a very resilient portfolio that we had below, the importance of having a very diversified and resilient portfolio. Strauss Coffee has had substantial good results in 2022. 2022 headed by Brazil and Russia, which the activity there made a jump -- a huge jump from 2021, and excellent net profit result. And I think that, that portfolio with Strauss Water which also continued its growth in the past couple of years and showing a very solid net profit. And the fact that our brands are much loved and appreciated by our consumers. And the fact that we have a very strong domestic hold here in Israel with a very large portfolio tells us a lot still to grow in 2022. And although we were hit by Sabra and by the confectionery, we still managed to show profit and we -- especially we still managed to grow in revenues. Next, and here is just a glance of what happened to our results. So you can see, as I mentioned before, growth in sales, we have a constant growth in the last couple of years. Our strategy, we started out that we've got to grow by 5% each year. You can see that more or less, we are keeping this. And last year, this year, we actually grew by 6.5%. And also for 2023, we -- our targets are to exceed our strategic goals into continued growth. But when it comes to gross margin and of course, net -- and EBIT and net profit, we were hit because of the things that I mentioned before. If we look at the free cash flow, that was a straight effect because of that. And with regard to net debt and EBITDA, you can see that we have grown from the 1.5 to 3 ratio because of the fact that on the one hand, EBITDA was down. And on the other hand, we were forced to -- again to increase our leverage -- increase our loans, increased our leverage by 300 -- more than ILS 300 million because of the situation that we went into. And that, of course, increased our ratio. And but when we're looking forward into 2023, we are led for seeing or forecasting the decline and getting back to the levels of 1.82, which we used to fix. And my last slide, with that, I'll finish and I'll pass it on to Ariel. Looking into 2023, we said that our targets and plans for 2023 are going to be covered by 3 major sectors, I say this way, pillars, that's the word that was looking for, pillars. The one is recovered, the other one is transformed, and the last is perform. So recover what we mean by that, is that taking the businesses or things which we didn't do well, and we need to fix such a Sabra, such as the confectionery getting them back into place. When we talk about transform as talking about the way if we did something in A, in a way, in a certain way and now we think that we need to change it and address it such as the transformation of our structure. So there are places where we need to transform the way we operate. And performance, of course, is to put a very high emphasis in 2023 on performances whether it has to do with our financial resilience, whether it has to do with our people or our brand. And all those pillars are working down into the different sections. So we have recovery in our portfolio. We are transforming our portfolio to perform. And it goes the rates for our infrastructure, our people and our financial results. And all of the company plans are very directed and very formed in this way so that we will manage to do that of course, RTP for 2023. So that is basically the glance picture of 2023. I'll also say one more word about 2023 -- a nice picture 2022. I would say another word about 2023, which is that looking now in the first quarter, and looking ahead, we already see the comeback of the confectionery, that almost on the same percentages we had before the recall. And with the increase of prices that we managed to do and the productivity activity that we are getting. It's going to be -- we focus is going to be a very different year, of course, in 2022, and it's going to get us back to track on our strategic path. And with that, I will pass it to Ariel. I hope I spoke slowly enough.

Thank you, Shai. I think we can agree, it was a pretty turbulent year for Strauss for the industry and in the global economy. And Ariel will take us now through a deeper dive into the financials of the quarter and 2022. Ariel, please go ahead.

Thank you, Daniella. Okay. So Shai went through the broad picture and also spoke a little bit about the year in -- as a whole, I will try to dive a little bit into the fourth quarter results. And let's start with the top line. We can see that Strauss grew by 8.7% in sales up to ILS 2.5 billion, organically 3.5%. You can see that this year, as a whole, in the fourth quarter, the same. We see positive translation -- currency translation effect on the top line and also on the bottom line. This is the first year out of many years that we are seeing that. And this is what we call the positive side of a less strong shekel and stronger foreign currencies like the U.S. dollar, the Brazilian real and the Russian ruble against shekel. We can see that segments -- the coffee segment is the segment that obviously grew the most this quarter as in the previous quarters. 34% growth, and the coffee segment comprises more than 50% of the total group sales. Most of this growth comes from price -- product price increases that we started to implement last year and followed this year, mainly in Brazil and the Central Eastern Europe. Obviously, in Israel, in the Coffee business in Israel, we didn't raise very strict prices, and very small part of this growth, 2% to 3% is due to volume growth. But the good news is that we didn't see any decline in volumes in most of our coffee activity countries, Europe, Brazil and in Israel. Although that outside of Israel, we raised our product prices by dozens of percentages and in Brazil, almost 100%. In Israel, we can see a decline in sales of 9.6%, but this decline also includes the -- we call effect of the confectionery division. If we take the confectionery aside. We can see in other slides, you have the data that Strauss Israel confectionery grew by 5.9% in the fourth quarter. And in the total year without confectionery 4.8%. This is the 28th quarter in a row that we are growing in sales in South Israel this year without the confectionery [indiscernible] recall event. This is the 28th quarter in a row that we are growing in our market share in the different categories here in Israel. And I think that this represents the strength of our brands here in Israel. And this is also the reason why we can see a very strong recovery in our confectionery sales after the balance sheet date. In the Dips & Spreads segment, we can see a decline of more than 24%. It is mainly due to the Sabra adjustment plan. And Shai showed you before, we're recovering also in Sabra. And after the balance sheet date, we are growing in sales and growing in our market share, but the recovery with Sabra in sales is much lower than what we are observing here in Israel with our confectionery products. Strauss Water grew only by 3.1% this quarter, but in the total year, more than 6%. The data year does not show the growth of higher Strauss Water sales in China because we include them on one line according to the equity method. But you can see in our reports and MD&A reports that higher Strauss Water grew by more than 13% in sales this quarter and more than 8% in the whole year, taking into consideration all the lockdowns that we experienced in China this year, we believe that this is a very good result for their top line. If we continue to the gross profit due to the effects that Shai also explained before, the Sabra and the confectionery crisis that we experienced this year and a very sharp increase in our input prices we see a decline, both in absolute gross profit and in our margins. If we look at the Strauss Israel segment, most of the decline is due to the recall of the confectionery, But we see also this quarter a decline in gross profitability due to the sharp increase in raw milk prices quarter-over-quarter, more than 16% price increase. And this is -- had a very considerable effect on our results. Looking forward, we can say that, first, as you know, at the end of December, we declared the raise in prices here in Israel on average, 2.9% on our portfolio, Israeli food categories portfolio. This we'll have -- we'll show in the next few quarters. And together with that, as we declared before, we have the reorganization program and the new operating model for Strauss Group that we call Strauss ONE, which will also affect positively our cost structure, and we should see a decline of somewhere between ILS 65 million to ILS 80 million in our cost platform. Most of it we will see next year. And we are working diligently on increasing our productivity initiatives through all of our supply chain parts and we are planning for additional productivity that will also be implemented next year and will also give us the back winds for 2024. Strauss Coffee, we can see that gross profit is growing, although gross profitability is still declining a little bit. This -- in our, let's say, international activity, both in Brazil and in Central and Eastern Europe. We raised prices a little bit more than our input price inflation. Therefore, gross profit is growing and we managed to improve a little bit our gross margins. But in Coffee Israel, as you can see in our segment report in this presentation, we are declining in our gross profitability due to the fact that we did not increase prices and green coffee prices increased quarter-over-quarter by more than 100%. Looking forward, we would say that -- if we look at Strauss Coffee Israel, we are aiming to maintain and even improve our profitability, let's say, EBIT profitability on an annual basis. If you will look at the annual statement, you can see that Strauss Coffee's annual EBIT profitability was about 12.5%. It is lower than what we were used to. We saw 18% to 20% -- 21%, 22% in previous years. We are sure that once green coffee prices will decline in the future, we will go back to much higher EBITDA margins. But for now, we are looking to stabilize our EBIT margins on an annual basis. The fourth quarter EBIT margin is especially low, but this is also due to a temporary shift in costs and increasing our marketing and selling costs. And please don't look at it as a prediction to the future. The EBIT declined to ILS 64 million this quarter compared to the fourth quarter of 2021, which was ILS 179 million. Most of the decline comes from the decline in the gross profit, mainly because of the Sabra and the confectionery crisis. And here, we can see the net income bridge. Our net income for the fourth quarter was ILS 26 million compared to ILS 103 million in the fourth quarter of 2021. We can see that on the right-hand side, the decline in profits in confectionery and Sabra affected materially our results, but if we put these 2 prices aside, we can see that our net profit is pretty much similar to our net profit in the fourth quarter of 2021. So it's important to understand that the ongoing business is managing to maintain the absolute level of profit -- net profit. And once we recover with the confectionery and Sabra, we can expect that the whole group will maintain its absolute net profit. Shai already talked on our leverage. So I won't talk about it anymore. A few anecdotes with relation to the year-to-date the whole year of 2022 that I want to point out. First of all, on the sales, you can see here in the middle part of the bridge that taking aside the loss of sales in confectionery in Sabra, we reached a run rate of over ILS 10 billion of sales for the whole group. This is our run rate. We are at a run rate of more than ILS 10 billion. And as you can see, we are recovering with very nicely with our confectionery sales. We are recovering more slowly with Sabra. But certainly, our run rate is expected to be higher than ILS 10 billion. If we look at the EBIT bridge for 2022, again, as Shai explained, we had 3 major, let's say, components that affected negatively our EBIT result this year. The confectionery recall on the right-hand side, the Sabra adjustment plan. And on the left side, we can see the FoodTech equity. On the one hand, we recorded a very, very large onetime profit because of the capital fund raise that Aleph Farms are the best start-up that we have in our kitchen portfolio had last year. But this year, we recorded mainly our part in the losses of most of the start-ups that we have in our Kitchen Hub. And therefore, there is a major difference in -- on the effect on the line. But if we take these 3 components aside, we can see that our ongoing business. We have a very resilient portfolio, as Shai explained before. This year, not like previous years, Strauss Israel wasn't the strongest part of our portfolio. We experienced high inflation in inputs. Our margins and EBIT margins declined. We see here the minus ILS [ 86 ] million compared to last year in Strauss Israel. But on the other side, Strauss Coffee had the best year ever in terms of the EBIT and net profit ILS 460 million EBIT for Strauss Coffee. And this has more than compensated for the margin erosion that we experienced in Strauss Israel. Therefore, we had an organic increase in our ongoing business of more than 5% on the EBIT line. Last but not least, we cannot conclude talking about this year without special, let's say, section for Brazil, Tres Coracoes. We start here for many quarters in previous years and spoke about how we're building this business very, very diligently and patiently waiting until we can really show excellent results. We experienced years with a decline in selling prices and declining margins. And we were -- in terms of the EBIT profit, we were, for many years around the BRL 200 million, BRL 300 million per year. But this year, you can see that we have dramatically increased and improved our results. First, we increased our prices more than the pervious prices. And second, we had a very nice increase in the previous 7 or 8 years in volume. And thirdly, we managed to improve our infrastructure and our productivity. Therefore, you can see the dramatic improvement in our results we achieved the BRL 568 million EBIT for this year, and our goal is to maintain this level of BRL 550 million and above for the next years. You can read our Brazil strategy in our MD&A and our annual reports, as Shai mentioned very briefly before, we have a very solid strategy to grow in coffee and also beyond coffee for the next 5 years, and we are very excited about the potential of Tres Coracoes is a very important part of our portfolio. I will conclude with that, and we can continue with Q&A.

Thank you, Ariel. [Operator Instructions] And we have a couple of questions from Chris Reimer from Barclays. Thank you, Chris for questions. How confident are you that Sabra can return to pre-recall market share or might that be too ambition?

I'll take that one. Thank you, Chris. I think that at the moment, it's very, very hard to predict whether we can get back to the same percent than just we were before. We can see ourselves gradually growing. There's a challenge getting back to the market. We see that we have some kind of a challenge with the big retailers there, such as Target, Costco, Walmart of getting us there. The fact that we were not there for a few months to need the vacuum and some of our competitors went in and private label group very much. But we are very, very much detriment of trying to get our market share back as much as possible. Right now, we are still #1, and we need to get back to almost 40%. To say if we will get back to 60%, it's very early and it's too early to say. Our ambition is to get back as close to what we were before and to do it as soon as possible, but it is a challenge.

Thanks, Shai. Second question is the price increase, as mentioned in the presentation, don't seem to be enough to mitigate the increase in input costs. How do you expect to overcome the difference?

So as I explained before, if we divided into our international activity into Israel activity. When we talk about international activity and the price increase more than covered the inflation that we encountered. But when we talk about Israel, because of the situation as well because of the duration as well because of the public opinion and the political situation, it's very hard to increase prices more than that. But as I mentioned before in my presentation, that's why we're not looking only on near-term price increase. We are looking into very, very extensive productivity targets that we put to ourselves and productivity action plan that we are setting up already started in 2022 and will further be in 2023. They are divided into 2 major sections. One, it has to do with our headcount. That one we already published. We did the One, a plan, which we actually cut down the speed of control. And we also approximately 150 people of our headcount go out of the company and were released from the company. But on the other hand, not just the headcount, we also have all our productivity plan where we have go through all our supply chain, our procurement, our logistic activity, our manufacturing everything from the purchase of the raw materials until we put our actual product on the shelf. And there, we have very, very extensive action items, which we are going to follow through in 2023 also in the year to come. And we hope that with price increase and productivity, extensive productivity [indiscernible] into -- to do in 2022 and '24, we'll be able to overlap this gap -- over come this gap.

And the final question from Chris. If you kind of Cree answered already, but can you give more color around the streamlining initiatives? And how they are expected to impact operations?

So I think I answered that question ahead, but thank you for those questions, Chris.

Excellent. And we do have a question from David Kaplan from [ Psagot ]. Thank you David. Can you talk about where you are with the restructuring Strauss One? If I'm not wrong, there are -- there was about ILS 60 million in other expenses related to the plan. How many more quarters will we see that in the results and what is expected and what -- sorry, and what is the expected cost of the plan that will lead to the ILS 65 million to ILS 80 million in savings?

Ariel, do you want to take that one?

Sure. Sure. Thank you. So first of all, the onetime cost of restructuring, we already recorded in the third quarter and the fourth quarter, they amounted to a total of about ILS 15 million. Now we are expecting to see the -- of course, the benefits of -- on a continuing basis of our plan in the next 1.5 years of roughly ILS 65 million to ILS 80 million of -- in improvement in our cost basis. So we will see most of it next year in 2023. The rest of it, we will see at the beginning or the first trimester of 2024, but the onetime costs we finished recording this year.

Okay. Thank you very much. One more question from David, sorry. Was the ILS 25 million in goodwill write-down from the closing of Obela?

No. So we had 2 events this year. In the first quarter, we had a write-down of goodwill of ILS 25 million in our Russia activity. As you remember, once the war started, Russia-Ukraine war started, we had to do an impairment check. And we concluded that we have to record an impairment of ILS 25 million to our goodwill in our Russia activity. The second part at the end of this year, actually, after the balance sheet date, but the decision was made at the end of 2022, we decided to exit Obela Europe. The exit costs of having some delays, some of the assets that we've had with relation to Obela Europe in our balance sheet were ILS 19 million and they were recorded in the fourth quarter. So ILS 25 million impairment in Russia, the Russia goodwill and ILS 19 million for exiting Obela Europe.

Excellent. Thank you very much, Ariel. Thank you, Shai. Thank you all for joining us today. As a reminder, all the materials are on our website. If you have any further questions, please feel free to contact me, and we look forward to seeing you next quarter. Thanks a lot. Bye-bye.

Bye, everybody. Nice meeting you.