According to a December 13 press realease, Caesarstone Ltd., a developer and manufacturer of high-quality engineered surfaces, provided an update on the closure of its manufacturing facility in Richmond Hill, Ga. and an update on the Australian market.
Consistent with the Company’s restructuring plan initiated in mid-2023, the Company announced the closure of its Richmond Hill manufacturing facility, effective mid-January 2024. This decision is expected to contribute savings of approximately $20 million annually by optimizing its manufacturing footprint.
Yos Shiran, Chief Executive Officer of Caesarstone, commented, “Our manufacturing network has been undergoing restructuring since earlier this year with the focus of optimizing our global production footprint. This transition will allow us to better serve our customers’ needs, streamline our operations and improve our overall competitiveness. This is part of the strategic plan we are implementing to focus on product innovation, investment in our brand, improve our go to market strategy and better position Caesarstone for long-term profitable growth in the years to come. I would like to thank the Richmond-Hill Community, Bryan County, the Georgia Government and all our valued employees and business partners there for their work and support over the years”
In connection with the facility closure, the Company expects to incur restructuring expenses and a one-time non-cash impairment charge totaling $45 million to $55 million during the fourth quarter of 2023. The Company estimates total cash costs will be in the amount of $3 million to $5 million related to operations, through 2024. Caesarstone expects annualized cash savings of approximately $20 million with the effect commencing during 2024, in addition to exploring opportunities to monetize the asset in the future.
The estimates of the impairment and expenditures that the Company expects to incur in connection with the closure, and the timing thereof, are subject to a number of assumptions and actual amounts may differ materially from estimates.
Australian Market Update
On December 13, 2023, Australian federal, state and territory governments announced a joint decision to ban the use, supply and manufacture of engineered stone slabs containing crystalline silica (including quartz-based products) in Australia. Subject to the formal adoption of the legislation and regulations, the ban will go into effect on July 1, 2024 in most Australian states and territories.
The Company notes that the safety of Caesarstone’s installed products to its end consumer was never an issue, and the products are safe to fabricate under safe working practices. While the Company disagrees with this decision, believes that the focus should be aimed at improving occupational health and safety, and has communicated its position to Australian governments, it is taking the necessary steps to ensure supply of alternative materials to its Australian customers in line with its high standards. This process is expected to negatively impact the Company’s sales in the near-term in the Australian market, which accounted for approximately 18 percent of revenue in the nine months ended September 2023.
Yos Shiran, added “The Caesarstone brand is well known in Australia and its products have earned tremendous success over the years. We are already taking steps to supply our Australian market with alternative products while maintaining our strong market presence.”
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