Israeli robotic swimming pool cleaner manufacturer Maytronics Ltd. (TASE:MTRN) continues to disappoint investors on the Tel Aviv Stock Exchange (TASE) by reporting on another quarter of disappointing results, and cutting guidance for the second successive quarter.
Consequently, the company's share price is currently down 20%, giving a market cap of NIS 1.27 billion, down 85% from its peak of NIS 7.8 billion at the end ofr 2021.
The company is controlled by Kibbutz Yizre'el, which has 300 members and holds a 56% stake worth NIS 730,000, down from a peak of NIS 5 billion.
At the same time as publishing its weak results, the company has announced that CFO Meni Maymon will leave in October - a position he assumed at the end of 2021.
Maytronics now expects 2024 annual revenue to be NIS 1.6-1.8 billion, down between 5% and 15% compared with 2023, whereas previous guidance saw only a 2%-4% fall. The company has also cut its gross profit forecast to 39%-40% of revenue.
In the second quarter of 2024 Maytronics reported revenue of NIS 607 million, down 17% from the corresponding quarter of last year. Gross profit fell to 41% of revenue from 42% last year and operational profit fell by 43% to NIS 73.3 million. Net profit amounted to NIS 43.2 million, down 53% from last year.
Extreme weather and competition from China
The reason for the slump in sales and especially in profit is explained by the company as due to high interest rates, which cause potential buyers to reconsider the purchase of pool cleaning robots. This is reflected with the products' distributors, who are stocking up with fewer robots, while trying to sell existing stocks. According to the company, lower inventory at distributors is not only not weakening, but has "intensified over the last year, as the supply chain strives to reduce the excess inventory that has accumulated since the end of the Covid period".
In addition, Maytronics also notes that "Extreme weather caused a late start to the pool season in Europe and North America over the last two years," while "the strengthening of online channels at the expense of traditional distribution channels," has forced companies, including Maytronics, to cut prices.
This price reduction is also due to the entry into the market of cheaper Chinese robots. The company says, "Online, the intensity of competition has increased significantly in recent years with the entry of a large number of Chinese players, who present good value offers at a wide range of prices, while investing significantly in digital marketing."
Published by Globes, Israel business news - en.globes.co.il - on August 21, 2024.
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