Caesarstone Seeks Big Rebound in 2021

By Emerson Schwartzkopf

MP MENASHE, Israel – Hard-surfaces producer Caesarstone Ltd. will do better in 2021, say company officials, as the world returns to more of a pre-pandemic normal.

However, the company didn’t fully share in the second-half 2020 business boom, with hindered revenue performance in the North American market and a net loss in last year’s fourth quarter.

The Israeli company’s 2020 financial results, released last week, reflected an unusual year that started in the middle of an overall business revamp and the shakeup of COVID-19 shutdowns.

“We made significant progress streamlining the business in 2020 as we successfully executed on our business transformation during a year marked by unprecedented global economic challenges,” saidd Yuval Dagim, Caesarstone CEO. “We now enter 2021 as a much stronger company.”

The company’s net income of $7.6 million last year reflected a 40.7% decline from 2019, although the biggest chunk of the damage came from a $4.6 million increase in finance expenses due to unfavorable foreign-exchange currency rates.

Worldwide 2020 revenues came to $486.4 million, down only 10.9% from 2019. Revenues from North America, the company’s largest market, accounted for much of the loss.

The $207.4 million in 2020 revenues in the United States represented a loss of 17.2% for Caesarstone from 2019 levels. Last year’s fourth quarter ended up being entirely representative for the company’s U.S. skid, with the $53.6 million noting a 17.1% drop from the last three months of 2019.

Ophir Yakovian, the company’s CFO, told U.S. investment analysts in a Feb. 24 conference call that lower sales at IKEA stores – where Caesarstone is a partner in countertop production – accounted for “roughly 40% of our North American sales decline in the quarter.” He also noted that some of this was offset by better-than-expected business for the company at U.S. Home Depot outlets.

This year will look better for Caesarstone’s U.S. operations with the acquisition, effective on the last day of 2020, of Omicron Granite and Tile, a U.S. stone supplier with 17 locations.

“We acquired the company in consideration of approximately $19 million, while assuming $8 million of net debt,” Yakovian said. “On a pro forma basis, Omicron was profitable and would have contributed over $50 million in revenue to the company’s 2020 results.”

Dagim also noted that the acquisition last year of Lioli Ceramica, a porcelain-slab manufacturer in India, will also strengthen revenue in the U.S. and worldwide in 2021.

All of this is interwoven into the company’s Global Growth Acceleration Plan that combined changes in production with an investment in sales, particularly in the United States. “The major growth will be happening in our company from the second quarter this year onwards,” he noted.

“So over the next few quarters, you’ll see us, closing the gap and demonstrating faster growth in the U.S. We now enter 2021 as a much stronger company and, with the right foundation in place, to more effectively leverage Caesarstone’s world-class brand to pursue sustainable long-term growth.”