On May 9, 2023, the Caesarstone approved initial steps of restructuring actions across the company’s operations, beginning with the closure of the manufacturing facility in Sdot-Yam, Israel, and a reduction in headcount of approximately 150 employees mostly associated with the facility. This part of the restructuring plan is intended to better align the company’s organizational structure, streamline global production and drive additional cost efficiencies through an optimized manufacturing footprint.
The Sdot-Yam plant is the company’s oldest facility. In February 2022, Israel 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.
The facility closure is intended to help improve the company’s profitability and cash flow. Once fully implemented the company expects to realize annualized cash savings of approximately $10.0 to $15.0 million, with the potential for additional cash savings if subleases are executed on the non-cancellable long-term facility lease agreement. Upon closure of the Sdot-Yam Facility, the company will continue to maintain its high level of service to customers through its remaining manufacturing facilities and its third-party manufacturers.
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