Willi-Food(WILC) - 2019 Q4 - Annual Report

Financial Performance - Revenues for fiscal year 2019 increased by NIS 57,392 thousand (USD 16,606 thousand), or 17.0%, to NIS 395,637 thousand (USD 114,478 thousand) from NIS 338,245 thousand (USD 97,872 thousand) in fiscal year 2018[203] - Cost of sales for fiscal year 2019 increased by 13.2% to NIS 271,784 thousand (USD 78,641 thousand), or 68.7% of revenues, compared to 71.0% of revenues in fiscal year 2018[204] - Gross profit for fiscal year 2019 increased by 26.1% to NIS 123,853 thousand (USD 35,837 thousand), or 31.3% of revenues, from 29.0% of revenues in fiscal year 2018[205] - Operating profit for fiscal year 2019 increased by 25.2% to NIS 47,296 thousand (USD 13,685 thousand), or 12.0% of revenues, compared to 11.2% of revenues in fiscal year 2018[209] - Profit before taxes on income for fiscal year 2019 increased by 98.8% to NIS 65,246 thousand (USD 18,879 thousand) from NIS 32,817 thousand (USD 9,496 thousand) in fiscal year 2018[211] - Net profit for fiscal year 2019 was NIS 51.5 million (USD 14.9 million), or NIS 3.90 (USD 1.13) per share[213] Cash Flow and Working Capital - Cash and cash equivalents decreased from NIS 134.2 million (USD 38.9 million) as of December 31, 2018 to NIS 121.9 million (USD 35.3 million) as of December 31, 2019[215] - The Company generated a negative cash flow from continuing operating activities of NIS 2.6 million (USD 0.7 million) in fiscal year 2019, compared to positive cash flow of NIS 27.0 million (USD 7.8 million) in fiscal year 2018[217] - Working capital as of December 31, 2019 was NIS 452.8 million (USD 131.0 million), compared to NIS 399 million (USD 115.6 million) as of December 31, 2018[220] Market and Economic Environment - In 2019, Israel's inflation rate was 0.3%, below the Bank of Israel's target range of 1%-3%[238] - Israel's GDP grew by 3.5% in 2019, indicating a stable economic environment[239] - The unemployment rate in Israel reached a historically low level of 3.5% by the end of 2019, reflecting a strong labor market[240] - Global economic growth slowed to 3% in 2019, the lowest since the 2008 financial crisis, influenced by factors such as the U.S.-China trade war[241] Regulatory Environment - The Food Law, effective January 15, 2015, aims to enhance competition in the food industry, requiring large retailers to advertise current prices online to facilitate price comparison[232] - The Food Law limits shelf space for large suppliers (annual sales over NIS 1 billion) to 50% in large stores, promoting opportunities for medium and small suppliers like the Company[236] - The Company is not classified as a large supplier under the Anti-Trust Authority, which may benefit its market position[236] - The Company anticipates that the Food Law will positively impact its financial results by increasing shelf space and reducing the influence of larger competitors[237] Risk Management - The Company is actively evaluating the financial stability of its customers through various assessments and inquiries[243] - The Company faces multiple risks, including increased competition, changes in consumer preferences, and potential impacts from international operations[23]