Caesar Stone Company completed layoffs of 200 employees, which is 10% of the company's workforce

Two months after lowering forecasts for 2022, and at the same time as the share price fell by 49% since the beginning of the year to a low that reflects a market value of $200 million, the Caesar Stone Company completed layoffs of 200 employees, which is 10% of the company's workforce. Most of the laid-off workers are in the US, which is the main market for Caesar Stone, and where the quartz and porcelain kitchen countertops manufacturer employed a third of its workers.
Even Caesar, which is controlled by Kibbutz Sdot Yam and the Tana Investment Fund (35%), is one of the leading producers of quartz surfaces in the world. The company, which is managed by Yuval Fish, suffers from weakness in the housing market in three of its four largest markets: the USA, Canada and Australia; and increasing competition from manufacturers from China and Vietnam in the lower segment of markets such as the USA and Australia, as well as strong competition in its home market in Israel The Spanish manufacturer Cosentino in brands such as Sillestone and Dekton and importers such as Fervital.
The American market - which provided Evan Caesar with 50% of its revenues in January-September 2022 - is suffering from weakness as a result of the effect of inflation, the increase in interest rates and the rise in mortgage prices. The weakness led to a sharp slowdown in the rate of price increases, a 35% drop in the number of transactions and a contraction in the activity of renovations. All of these caused a quantitative decrease in Caesar's stone sales in the US, which was spread by raising prices. A similar weakness is also evident in the Canadian housing market, the country that provides Caesar's stone with 14% of its revenues, and to a lesser extent in the Australian market, where Caesar's stone is dominated by manufacturers from China and Vietnam.
In recent years, Caesar Stone has tried to accelerate its growth by expanding its involvement in the kitchen countertops market to other materials beyond quartz, such as porcelain granite. As part of the move, the company acquired control of the Indian company Lioli in August 2020 for $12 million, and the natural stone distribution company Omicron in January 2021 for $19 million - a purchase that also expanded Caesar Stone's marketing layout and strengthened its presence in Florida and Ohio .
Even Caesar presented a loss of $400,000 in the third quarter of 2022 compared to a profit of $6 million in the corresponding quarter in 2021, following an erosion in gross profitability and a 65% drop in operating profit, and this despite an 11% growth in its revenues to $181 million mainly as a result of raising Prices.
In the third quarter of 2022, the company lowered its revenue forecast for 2022 as a whole to $690-700 million, compared to the previous forecast for revenues of $710-725 million. This is as a result of the strengthening of the dollar and as a result of a decrease in the forecast for the quantitative scope of sales due to the slowdown in the housing markets, mainly in the USA.
Even Caesar's Adjusted Ebitda rate decreased to 8.0%-8.5% compared to 10.6% in 2021, due to the impact of the strengthening dollar and increased transportation and logistics expenses.
Eben Kiser responded: "As a company exposed to the conditions of the global market and its fluctuations, we were required to adjust the scope of our operations in order to deal with a slowdown/recession and a decrease in the demand for kitchen work surfaces among private consumers and in commercial projects around the world. As we were recently informed, the company has begun implementing an overall streamlining procedure A series of steps, with one of the steps being a reduction of about 10% of our workforce, a small part of them in Israel, and the main mass in the company's facilities around the world. In addition, we are also making operational efficiency moves, price increases, focusing on growth engines, etc. We emphasize that Ibn Caesar is a strong global brand with high consumer and business partner loyalty, something that will help better deal with the consequences of the period."