Israel-based countertop manufacturer Caesarstone Ltd. will shut its flagship production site and lay off more than 100 employees as part of a restructuring plan to make the company more efficient and leaner, as the firm posted a loss for the first quarter of the year compared to a profit last year.
As part of the restructuring plan, Nasdaq-listed Caesarstone will close its plant in the coastal Kibbutz Sdot Yam and reduce headcount by 150 employees, mostly at the Israel facility. The company cut 9% of its global workforce in 2022 as it focused on streamlining global production and lowering costs.
As of Dec. 2022, Caesarstone had 2,111employees, of whom 655 were based in Israel, with 657 employees in the US and 454 in India.
Following the closure of the Sdot Yam site, production will be shifted to other plants in Israel and abroad including third-party manufacturers in low-cost countries, the company said in a presentation on Wednesday.
The closure of the Sdot Yam production plant was announced as the venerable maker of kitchen counters reported a first-quarter loss of $3.8 million, compared to net income of $6.2 million during the same period last year. Revenue in the first quarter of 2023 declined to $150.6 million from $170.4 million in the prior year’s first quarter. Caesarstone expects the plant closure will help improve the company’s profitability and cash flow.
“It is clear that Caesarstone has been lagging behind in its ability to generate profit and increase value for its shareholders,” stated Caesarstone CEO Yos Shiran. “As a first major step in our restructuring plan, we have stopped production at our Sdot-Yam facility in Israel and are taking actions to permanently close the site.”
“The Sdot-Yam facility is our oldest plant. This difficult yet necessary step is expected to improve efficiencies, reduce costs and allow us to create a more agile company as we streamline our production,” Shiran added.
Founded in 1987, Caesarstone develops and manufactures engineered quartz surfaces and slabs, which are primarily used as kitchen countertops and other surfaces such as vanity tops, wall panels, back splashes, floor tiles, and stairs for indoor and outdoor spaces. Its products are sold in 50 countries through international subsidiaries and indirect sales channels.
Caesarstone’s ending of production at the Sdot Yam plant comes after Israel last year adopted a long-term goal for the reduction of environmental emissions.
“Although that goal had not yet impacted operations at the Sdot-Yam facility, the company determined that the required upgrades and modernization of the facility to meet the new regulations in the future would require an impractical level of investment into the facility, further contributing to the decision to close the facility,” Caesarstone said in its earnings report.
The closure of the Sdot Yam plant is expected to incur estimated cash costs of $4 million to $8 million related to operations, beginning in the second quarter of 2023 and continuing through the next 12 months. Once the closure is fully implemented, Caesarstone hopes to realize annualized cash savings of $10 million to $15 million, with the potential for additional cash savings.