At IsraelNewsletter.com, we like to focus on Israeli impact on public markets.  Whether it’s the 100+ Israeli companies listed in the U.S., M&A, or strategic partnerships, Israel technology is making its way into the global Fortune 100.  While IOI analyst Katsman continues to like G. Willi Foods (WILC) for their leading kosher export business (see what he’s written here), there is more applied Israeli technology to the food industry than the general public realizes.

In today’s Globes, there’s an interesting article about Nestle’s (NSRGY) cooperation with Israeli food company, Osem.  Seems the Swiss recognize Israel’s value proposition in various industries as I wrote about Novartis’ recent acknowledgement of Teva’s (TEVA) superiority in the generic pharma field.

Who knew about packaged food though? (Continue »)

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Aaron Katsman
IsraelNewsletter.com

The inflation bug has most of us worried. Recently in Israel the CPI was released and showed a 4.7% surge in prices. This is obviously not just a problem in Israel. Throughout the world, inflation, especially food inflation, is alive and well, and has been for quite some time. While at first glance investors might think that food stocks should benefit from higher prices, in practice they have performed poorly over the last few quarters. They have been unable to pass on their higher costs to consumers.
This is why today’s earnings report from G. Willi Food International (WILC), is interesting. For consumers, the earnings report signals more food price hikes coming down the road. For G. Willi, it means a return to strong growth.

Why?

Because commenting on the report, CEO Zwi Williger said, ” Furthermore first quarter’s results demonstrate that we are beginning to regain the momentum that had been building over the past few years as we have been able to successfully pass on some of our costs to our customers.”

The problem that has plagued food stocks of late is that they haven’t been able to pass on costs. The fact that G. Willi has started to do so, potentially could prove to be a big boost to their bottom line.

As for its report, the company showed strong revenue growth aided by recent acquisitions, like Shamir Salads, who produce healthy Mediterranean salads, like Hummous.

While the company refrained from providing guidance for the rest of the year, if we see a drop in the price of food materials, G. Willi could potentially benefit.

Disclosure: Author’s fund has a position in WILC. He has no position in any other stock mentioned as of 5/28/08.

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Aaron Katsman
www.IsraelNewsletter.com

In today’s issue of the Israeli financial paper Globes, Merav Ankori, has an interesting article on how the US Army is looking to invest in Israeli water technology. Apparently the US Army invests sizable amounts of money in private equity, and one of the funds, Onpoint Technologies, is managed by Arsenal Venture Partners.  Christopher Fountas, Arsenal managing partner and Onpoint director, is in Israel looking for local water technology companies.

In an interview with Globes, Fountas said, “We manage investments in technologies for the US Army to meet needs that arise in wartime, such as during operations in Iraq, and for the government and industrial markets. We’ve come to Israel with the understanding that it’s a global leader in water technologies.”

While it’s true that Israel is a global leader in exporting all kinds of water technologies to the world, it’s ironic that Israel is facing a water shortage. With below average rain over the last few winters, the country’s main water sources are at dangerously low levels. For Israelis the summer is sure to bring calls for water conservation. Why? Because of bureaucracy. Israel has done next to nothing to shore up its’ own water supply. With all the technological advances including desalination and drip irrigation, Israeli bureaucrats and legislators, as usual, were asleep at the wheel. While Israeli companies were out making millions of dollars selling their technology abroad, a crisis developed locally.

At least US soldiers will be drinking clean water. L’chaim!

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NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Aaron Katsman
www.IsraelNewsletter.com

G. Willi-Food International Ltd(WILC), one of our favorites here at Israelnewsletter.com, reported a 21% increase in revenues for Q3 ‘07 versus the same quarter ‘06. As expected profit decreased as the company suffered from a drop in margins. The worldwide increase in dairy prices impacted G. Willi’s Q3  gross margins, as they declined to 20% compared to 27% in the same period a year ago.

Mr. Zwi Williger, President and COO of Willi-Food commented, “Third quarter results are in line with our expectations for the period. In this period, nearly all of our shortfalls can be attributed to gross margin decline in our dairy business. As previously stated, Willi Food and the global dairy industry continues to experience cost pressures due to weather related problems, reduced milk production, cessation of EU dairy export subsidies at the same time that consumption and demand for dairy has increased in growing emerging markets. These factors have negatively impacted Willi Food’s near term sales and gross margins on cheeses and other products.”

Mr. Williger continued, “While we believe that this trend shall continue through the remainder of the year, we anticipate that the cost of raw food materials will stabilize by mid-2008. In the interim, we are successfully leveraging our infrastructure, hedging our strategic direction through smart acquisitions and setting the stage for growth in 2008.”

The company continues to grow and we continue to like this for the long-term. With limited volume the stock price is subject to large swings. Long-term investors should keep their eye focused on the long-term regarding this stock. As they continue to execute their business plan, I would expect the stock to continue to move up.

Please see our Disclaimer HERE.

Disclosure: Author has a position in WILC. He holds no position in any other stock mentioned, as of 11/29/07.

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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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