Illustration
Photo: Strauss
SodaStream International is cutting its fiscal 2013 forecast, hurt in part by a tough US holiday season and increased product costs.
SodaStream employs 900 Palestinians in the Israeli settlements where its products are manufactured and according to reports pays Palestinian employees Israeli wages. Because of the factories' location
in the West Bank, the carbonation company has faced repeated calls for boycotts.
The Israeli company's stock slid almost 16 percent in Monday premarket trading.
SodaStream makes beverage carbonation systems that allow consumers to turn tap water into sparkling water and carbonated soft drinks. Besides selling the machines, it also makes money by selling gas refills and flavors for it.
In 2013, the West Bank-based company teamed up with home appliance giant KitchenAid and launched its carbonation products at Wal-Mart, but the new ventures did not result in the revenue increased expected.
SodaStream Sales
Despite becoming focus of various boycott campaigns due to its location inside West Bank, SodaStream CEO believes his company is building bridge between Palestinians and Israelis
The company now anticipates full-year net income of about $41.5 million on revenue of approximately $562 million. Its prior outlook was for net income of $54 million on revenue of about $567 million.
Analysts, on average, expect revenue of $564.3 million, according to a FactSet survey.
CEO Daniel Birnbaum said in a statement that the holiday season was "challenging" in the US and that its fourth-quarter performance was disappointing. The executive said the company's gross margin was pressured by lower sell-in prices, higher product costs, a product mix shift and unfavorable foreign currency exchange rates.
Shares of SodaStream International Ltd. dropped $7.89, or 15.8 percent, to $42 about an hour before the market open.