The growth trend in Caesarstone Israel continued in the third quarter of 2021

The growth trend in Caesarstone Israel continued in the third quarter of 2021, but the jump in shipping costs and the price of raw materials - which weighs heavily on a large number of industrial companies - severely hurt the company's profitability.  Caesarstone Israel, which manufactures and markets porcelain and natural stone quartz slabs for kitchen countertops, bathrooms and wall coverings, earned $ 6 million, which is 17 cents a share, in the third quarter of 2021 - a 53% decrease from the same quarter in 2020.
Even Caesar's operating profit fell 40% in the third quarter of 2021 compared to the same quarter in 2020, and amounted to $ 9 million, which is 5.4% of turnover, compared to 12.1% of turnover in the corresponding quarter of 2020. The decline is a result of the erosion in gross profit and a 49% increase in sales and marketing expenses in the past quarter, compared to the corresponding quarter in 2020, resulting from a return to regular marketing activity in parallel with a gradual exit from the Corona crisis.
The company's revenues grew by 32% in the last quarter, compared to the corresponding quarter in 2020, and reached a record level of $ 163 million. The increase in the company's revenues was due to an organic growth of 14% in its revenues, from the acquisition of the American distribution company Omicron in January, and the acquisition of the Indian porcelain products manufacturer Lioli in October 2020, which together contributed $ 22 million to the company's revenues last quarter.
Even Caesar's revenue in the US, which is the company's largest market, grew by 52% in the third quarter of 2021 compared to the same quarter in 2020, and amounted to $ 79 million. Nahum Trust, CFO of Even Caesar, notes Because distribution company Omicron increased the company's revenue in the US by $ 17.4 million, so even after deducting its contribution, Caesar Stone recorded 18% growth in the US.
Yuval Dagim, CEO of  Caesarstone Israel, noted that the sharp increase in the US is due to the resumption of IKEA's activity in the kitchen field, after it was almost completely shut down in 2020, as well as a 50% increase in Caesarstone Israel's sales in the Home Depot chain. Caesarstone Israel's revenue increased in Canada by 17% in the last quarter, compared to the same quarter in 2020, and amounted to $ 22.5 million, thanks to the resumption of IKEA's operations in the country. According to Fish, the gradual increase in the Swedish chain's activity in Canada embodies the potential for further sales growth. In addition, Caesarstone Israel recorded a 5% increase in Australia in the last quarter compared to the same quarter in 2020, to a level of $ 29 million, even though Australia was closed for most of the quarter.
The good news for the third quarter stops when it reaches the gross profit line. Sales in Israel fell by 7% in the third quarter of 2021, compared to the same quarter last year, and amounted to $ 10 million - this is due to a decrease in sales days during the Tishrei holidays, and a decrease in the share of quartz in favor of porcelain, which increases its market share through importers like Infinity , Neolith and Laminam. Pisces stressed that the company has launched five porcelain products, manufactured by its subsidiary Lioli, and is regaining some market share.
Even Caesar's gross profit increased by 10% in the last quarter compared to the corresponding quarter in 2020, and amounted to $ 43 million, which is 26.1% of turnover, compared to 31.3% of turnover in the corresponding quarter last year. According to Fish and Trust, the erosion in gross profit is due to the jump in raw material prices - and especially the jump in the price of polyester - used in the production of quartz boards, as well as a sharp rise of up to 300% in sea shipping prices. The rise in sea freight and raw material prices was partially offset by the sales mix, which was biased towards relatively expensive product families like Natural and Super Natural, as well as by an increase in the US share of the company's overall sales turnover, alongside favorable exchange rates.