Israeli nonwoven cloth manufacturer NR Spuntech Industries' (TASE: SPNTC) share price was up more than 1% today and 26% in the past six trading days. The company today reported the signing of a contract for three more years (until June 2021) with Procter & Gamble for the supply of products used in the production of wet wipes.
Spuntech says that the annual pace of its sales to Procter & Gamble will be within a 10% interval around $43 million ($130 million for the entire three-year period), similar to its sales to the US company in the second half of 2017. Spuntech also believes that its sales to Proctor and Gamble will total $60-70 million this year (together with other products it will supply).
Spuntech manufactures nonwoven cloth used as raw material in the production of wet wipes for international brands and the private brands market. Its products are sold to companies like Procter & Gamble, which convert the nonwoven cloth into the final product by cutting it and putting it into final packages for the consumer.
The company's controlling shareholder is Nissan Medical Industries Ltd. (TASE: NISA), controlled by Yehezkel Nissan. Its market cap is NIS 730 million, 40% lower than the peak it reached in April 2016. Spuntech made headlines last year because of its frequent management changes culminating in the return of CEO Gideon Krasny in early July 2017 18 months after he resigned from the post.
Spuntech finished the first quarter of 2018 with NIS 153.5 million in revenue, 13.6% more than in the corresponding quarter last year, owing to growth in quantitative sales, despite the strengthening of the shekel against the dollar. The company quintupled its operating profit to NIS 13.5 million and posted a NIS 6 million net profit, compared with a nominal NIS 33,000 profit in the first quarter of 2017.
Spuntech's sales totaled NIS 584 million in 2017, 15% more than in 2016, but higher miscellaneous expenses, the strengthening of the shekel, and a change in the company's mix of products caused a 26% drop to NIS 26.6 million in its 2017 net profit. The company's new contract is therefore very important for it because it accounts for nearly 30% of its annual revenue and 40% together with the other products sold to Procter & Gamble, according to Spuntech's 2017 results.
Published by Globes [online], Israel business news - www.globes-online.com - on June 6, 2018
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