INTERNATIONAL FINANCIAL REPORTING STANDARDS
FIRST ADOPTION
- 2018 FULL YEAR OPERATING RESULT OF
-€25.5 MILLION
- 2018 FULL YEAR NET PROFIT OF €33.3
MILLION THANKS TO EXTRAORDINARY INCOME
- GROUP’S NET FINANCIAL POSITION
POSITIVE AT €6.0 MILLION AS OF DEC. 31, 2018
- NET OF RESTRUCTURING COSTS, Q4 2018
OPERATING LOSS IMPROVING VERSUS FIRST THREE QUARTERS OF
2018
- Q4 2018 DIRECT RETAIL OPERATIONS
IMPROVING ON A LIKE-FOR-LIKE BASIS
- REORGANIZATION OF THE ITALIAN
WORKFORCE IN 2019
The Board of Directors of Natuzzi S.p.A. (NYSE:NTZ) (“Natuzzi”
or the “Company”) today presented and approved its 2018 fourth
quarter and full year unaudited consolidated financial results and
the Company’s draft financial statements.
IFRS adoption
As previously announced, unaudited consolidated financial
statements are presented according to the International Financial
Reporting Standards (IFRS) as issued by IASB.
Natuzzi’s has resolved to voluntarily adopt International
Financial Reporting Standards (IFRS) for its consolidated financial
statements from the fiscal year ended December 31, 2018, in place
of the Italian Generally Accepted Accounting Principles (ITA-GAAP).
The financial information reported herein should be considered to
be preliminary until Natuzzi files its annual report on Form 20-F
for the fiscal year ended December 31, 2018.
2018 fourth quarter
results
Consolidated revenues for the fourth quarter of 2018 were €115.2
million, down 4.1% from 2017 same period.
Upholstery and furnishings net sales were €110.4 million, down
2.5% from last year same period as a result of the 4.9% decrease in
upholstery net sales (at €96.5 million), partially offset by the
18.4% increase in furnishings sales (at €13.9 million).
Other sales were €4.8 million in fourth quarter 2018, versus
€6.9 million in 2017 fourth quarter.
1. Natuzzi division
The Natuzzi division sales includes Natuzzi Italia, Natuzzi
Editions and Divani&Divani by Natuzzi, distributed through both
direct retail network and third-party operated points of sales.
Fourth quarter net sales of this division were €86.3 million,
down 2.0% from €88.0 million in 2017 same period. The Americas went
up 15.2%, while the EMEA region registered a -11.0% over 2017
fourth quarter.
Within the Natuzzi division, Natuzzi Italia net sales increased
by 2.9% over 2017 comparable period and represents 37.0% of the
entire Group’s core business (as compared to 35.1% in prior year
fourth quarter). Notably, Natuzzi Italia net sales have increased
for nine consecutive quarters.
The Divani&Divani by Natuzzi network grew by 3.6% over 2017
fourth quarter.
On the contrary, Natuzzi Editions net sales decreased by 7.9%
over 2017 same quarter, due in particular to weak performance in
some European Countries.
1.a Natuzzi division: Direct
retail
Within the above-mentioned Natuzzi division, the Group directly
operates points of sales, under both Natuzzi Italia and
Divani&Divani by Natuzzi name.
As previously disclosed, following the execution of the
partnership in China, the 11 Natuzzi Editions Directly Operated
Stores (“DOS”) were transferred and, consequently, are no longer
considered in the consolidated financial statements. Therefore, the
following direct retail division numbers are displayed
accordingly.
During 2018, we opened 6 Natuzzi Italia DOS, of which 3 in the
USA, 2 in France and 1 in the UK.
As of the day of this press release, the Directly Operated
points of sale are 66, of which 39 DOS Natuzzi Italia, 15 DOS
Divani&Divani by Natuzzi and 12 Natuzzi Italia concessions in
Mexico, having recently closed 8 concessions in UK.
During the fourth quarter of 2018, net sales generated by the
direct retail division were €16.8 million, up 4.4% over the same
period of last year, with positive sales numbers in particular in
the USA (+46.0%), Italy (+19.5%) and Switzerland (+22.2%).
Q4 2018 sales on a like-for-like basis were €12.9 million, up
10.6% from €11.6 million in the last quarter of 2017, thanks in
particular to the performance of our DOS located in the USA
(+32.7%), Italy (+19.6%) and Switzerland (+25.3%).
1.b Natuzzi division: wholesale
Natuzzi Sales generated by the wholesale channel (Natuzzi
franchised operated stores, “FOS”, and other selling formats), were
€69.5 million, down 3.4% from €72.0 million for the last quarter of
2017.
Within this wholesale channel, Natuzzi Italia sales were €28.2
million, up 3.9%, Natuzzi Editions sales were €37.0 million, down
7.9%, and sales from Divani&Divani by Natuzzi network were €4.3
million, down 6.6% compared to fourth quarter 2017.
We recently launched a new store concept for the Natuzzi
Editions business with the recent openings in Cardiff, Wales, and
Glasgow, Scotland, showcasing the most recent Natuzzi Editions
collections in a completely renovated retail environment. These two
openings are intended to lay the foundations for the Natuzzi
Editions expansion through the mono brand stores.
This new Natuzzi Editions retail concept has just been displayed
at the High Point fair and is intended to be the crucial driver for
the distribution in the USA.
2. Softaly
Sales generated by this division, addressing the low-end segment
of the market, were €24.1 million, from €25.2 million in 2017
fourth quarter. The Company’s aim for this division is to focus
primarily on a few selected primary customers.
Q4 2018 Gross margin
During the fourth quarter of 2018, the consolidated gross margin
was 27.4%, from 28.9% in prior year fourth quarter.
The Company has continued to restructure its Italian operations.
For this reason, cost of sales in the last quarter of 2018, which
has passed from 71.1% on revenues to 72.6%, was penalized by €5.6
million of costs pertaining, in particular, the incentive program
to reduce the workforce. In the prior year fourth quarter, the
Company incurred in only €0.8 million of similar costs included in
the cost of sales.
Net of the above-mentioned costs and also thanks to a favorable
trend in raw material prices in Q4 2018, cost of sales would have
been 67.7% from 70.4% in 2017 fourth quarter, and gross margin
would have increased at 32.3% on revenues versus 29.6% in 2017 same
period.
Q4 2018 Selling and Administrative
expenses
Selling and Administrative expenses were €40.4 million (or 35.0%
on revenues) from €40.9 million (or 34.1% on revenues) in last year
same period, affected by costs of €1.3 million for a similar
incentive program to reduce the workforce in the Headquarters as
described above.
Q4 2018 operating results
The Group reported an operating loss of €8.9 million, versus an
operating loss of €6.3 million in 2017 fourth quarter. Excluding
the €6.9 million of the already mentioned costs, for 2018 fourth
quarter the Group would have reported an operating loss of €2.0
million.
2018 Full year results
Total Consolidated net revenues for full year 2018 were €428.5
million, down 4.5% from €448.9 million in 2017, or down 1.8% under
constant exchange rates.
The Company reported a yearly operating loss of €25.5 million
(or a €21.7 million, net of the currency effect) versus an
operating loss of €24.0 million in 2017.
On July 27, 2018, the partnership agreement with KUKA Furniture
(Ningbo) Co., Ltd. was finalized and consequently the Natuzzi
Trading Shanghai Co. Ltd. was deconsolidated. As a consequence of
this disposal, the Company accounted extraordinary income under the
“Gain from disposal and loss of control of a subsidiary” caption
within the unaudited consolidated profit and loss statement, for a
total of €75.4 million.
Thanks to this extraordinary income, Net Profit attributable to
the Owners of the Company in 2018 was €33.3 million.
As of December 31, 2018, cash and cash equivalents, net, for the
Group was €60.4 million, from €55.0 million at the end of 2017, and
the Group’s net financial position (cash – short and long term
borrowings) was positive by €6.0 million compared to €3.4 million
at the end of 2017.
Chairman and CEO Pasquale Natuzzi commented: “The global
competitive environment and the fast-changing consumers’ habits
have greatly affected our industry over the years. The traditional
wholesale distribution channel has been struggling over the last
few years in adapting its business model to the such new
challenges.
In this regard, we are all aware of the increasing difficulties
that in some cases have led to a significant downsizing of the
business or to more drastic consequences, as much in the USA as in
Europe, of some big players in the distribution.
On the other hand, most of our competitors have already switched
from a wholesale business to a retail-based business, and hence to
a distribution model that is mainly controlled by means of a
mono-brand store network.
This new context has implied a radical transformation of our
Group, still ongoing.
In 2019, we will continue to expand our mono-brand store
network. While the Natuzzi Italia network is delivering overall
positive results, we will focus our efforts also in enhancing the
productivity of the Natuzzi Editions stores. We have just finalized
the Natuzzi Editions retail business model and store concept which
was presented in January during the Cologne exhibition, raising
interest among dealers, and nowadays also at the High Point fair.
We are now particularly focused on leveraging the investments done
in the new Natuzzi Editions retail format by opening stores in UK,
USA, Australia, Italy and, of course, in China with our
partners.
While we continue with the execution of the retail strategy,
2019 will see, on the contrary, a significant change in the
organizations of our Italian industrial operations that will start
reducing manufacturing cost starting from Q2 2019. We’ll continue
to focus on the supply chain, whose improving efficiency has been
already visible in Q4 2018.
Such reduction in the Italian labor cost, together with the
increased efficiency in the supply chain, improvement in the sales
mix and a more favorable trend in raw materials, are the basis for
the profitability improvement targeted for this year. However, we
are aware that the still ongoing discussions about tariffs and the
worsening of the economic environment continue to generate
uncertainty.”
The Company’s Board of Directors today also resolved to propose
at the next Company’s ordinary and extraordinary shareholders’
meeting, which is expected to be held on April 29, 2019 (first
call), or May 2, 2019 (second call), the following items on the
agenda:
- The appointment of the Company’s
External Auditors and the Board of Statutory Auditors both for the
three-year period from 2019 to 2021;
- The authorization for a share-based
incentive plan for certain managers and directors of the Company
and other companies within the Natuzzi Group;
- An American Depositary Receipts
(“ADR”)/Share buyback program.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS
Certain statements set forth in this press release constitute
forward-looking statements within the meaning of the safe harbor
provisions of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements involve risks and uncertainties that
could cause the Company’s actual results to differ materially from
those stated or implied by such forward-looking statements. More
information about the potential factors that could affect the
Company’s business and financial results is included in the
Company’s filings with the Securities and Exchange Commission,
including the Company’s most recent Annual Report on Form 20-F. The
Company undertakes no obligation to update any of the
forward-looking statements after the date of this press
release.
About Natuzzi S.p.A.
Founded in 1959 by Pasquale Natuzzi, Natuzzi S.p.A. is Italy’s
largest furniture house and one of the most important global
players in the furniture industry with an extensive manufacturing
footprint and a global retail network. Natuzzi is the European
lifestyle best-known brand in the upholstered furnishings sector
worldwide (Brand Awareness Monitoring Report - Ipsos 2018) and has
been listed on the New York Stock Exchange since May 13, 1993.
Always committed to social responsibility and environmental
sustainability, Natuzzi S.p.A. is ISO 9001 and 14001 certified
(Quality and Environment), OHSAS 18001 certified (Safety on the
Workplace) and FSC® certified (Forest Stewardship Council).
https://www.natuzzigroup.com/en-EN/ir/presentation.html
NATUZZI’S HAS RESOLVED TO VOLUNTARILY ADOPT INTERNATIONAL
FINANCIAL REPORTING STANDARDS (IFRS) FOR ITS CONSOLIDATED FINANCIAL
STATEMENTS FROM THE FISCAL YEAR ENDED DECEMBER 31, 2018, IN PLACE
OF THE ITALIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (ITA-GAAP).
THE FINANCIAL INFORMATION REPORTED HEREIN SHOULD BE CONSIDERED TO
BE PRELIMINARY UNTIL NATUZZI FILES ITS ANNUAL REPORT ON FORM 20-F
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018.
Natuzzi S.p.A. and Subsidiaries Unaudited
Consolidated Profit & Loss for the fourth quarter of 2018 &
2017 on the basis of IFRS -IAS (expressed in millions Euro)
Three months ended on
Change Percentage of Sales
31-Dec-18 31-Dec-17 %
31-Dec-18 31-Dec-17 Revenues
115.2 120.1 -4.1% 100.0% 100.0% Cost of Sales (83.6)
(85.3) -2.0% -72.6% -71.1%
Gross profit
31.6 34.7 -9.1%
27.4% 28.9% Other income 1.1 0.0
Selling Expenses (30.1) (30.4) -0.9% -26.1% -25.3% Administrative
expenses (10.3) (10.5) -2.5% -8.9% -8.8% Impairment on trade
receivables and contract asset (0.6) 0.0 Other expenses (0.6) (0.3)
Operating profit/(loss) (8.9)
(6.3) -7.7%
-5.3% Net finance income/(costs) (2.6) (0.6) Share of
profit of equity-accounted investees, net of tax (0.5) 0.0 Gain
from disposal and loss of control of a subsidiary 0.0 0.0
Profit/(Loss) before tax (12.0)
(6.9) -10.4% -5.7%
Income tax expense (0.5) 0.2 -0.4% 0.1%
Profit/(Loss) for the period (12.5)
(6.7) -10.8% -5.6%
Profit/(Loss) attributable to: Owners of the Company
(12.3) (6.6) -10.7% -5.5% Non-controlling interests (0.2) (0.1)
Profit/(loss) per Ordinary Share
(0.22) (0.12)
(*) Purchases plus beginning stock minus final
stock and leather processing
Natuzzi S.p.A. and
Subsidiaries Unaudited Consolidated Profit & Loss for
the twelve months of 2018 & 2017 on the basis of IFRS-IAS
(expressed in millions Euro)
Twelve months
ended on Change Percentage of Sales
31-Dec-18 31-Dec-17
% 31-Dec-18 31-Dec-17
Revenues 428.5 448.9 -4.5% 100.0% 100.0% Cost of Sales
(308.2) (318.4) -3.2% -71.9%
-70.9%
Gross profit 120.3 130.5
-7.8% 28.1% 29.1%
Other income 5.9 1.7 Selling expenses (115.0) (118.3) -2.8% -26.8%
-26.3% Administrative expenses (35.3) (36.1) -2.1% -8.2% -8.0%
Impairment on trade receivables and contract asset (0.7) (1.5)
Other expenses (0.6) (0.3)
Operating
profit/(loss) (25.5) (24.0)
-5.9% -5.3% Net finance
income/(costs) (9.1) (4.0) Share of profit/(loss) of
equity-accounted investees, net of tax (0.3) 0.0 Gain from disposal
and loss of control of a subsidiary 75.4 0.0
Profit/(Loss) before tax 40.5
(28.0) 9.5% -6.2%
Income tax expense (7.4) (2.9) -1.7% -0.6%
Profit/(Loss) for the period 33.1
(30.8) 7.7% -6.9%
Profit/(Loss) attributable to: Owners of the Company
33.3 (30.4) 7.8% -6.8% Non-controlling interests (0.2) (0.5)
Profit/(Loss) per Ordinary Share 0.61
(0.55)
(*) Purchases plus beginning stock minus final stock and
leather processing
Natuzzi S.p.A. and Subsidiaries
Unaudited Consolidated Balance Sheets (Condensed) on the basis
of IFRS-IAS
(Expressed in millions of Euro)
31-Dec-18
31-Dec-17 ASSETS Non-current assets 165.6
126.0 Current assets 207.1 206.6
TOTAL ASSETS
372.7 332.5 LIABILITIES AND
SHAREHOLDERS' EQUITY Shareholders' equity 136.5 102.5
Non-controlling interests 1.6 2.0 Non Current Liabilities 66.1 73.1
Current liabilities 168.4 154.9
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY 372.7
332.5 Natuzzi S.p.A. and Subsidiaries Unaudited
Consolidated Statements of Cash Flows (Condensed) (Expressed in
millions of Euro)
31-Dec-18
31-Dec-17
Cash flows from operating activities Profit
for the period 33.1 (30.8)
Net cash provided by (used in)
operating activities (11.3) (4.9) Net cash
provided by (used in) investing activities 14.6 (10.4) Net
cash provided by (used in) financing activities 2.2 12.4
Increase (decrease) in cash and cash equivalents 5.4 (2.9)
Cash and cash equivalents, beginning of the year 55.0 60.6
Effect of movements in excahnge rates on cash held (0.1) (2.6)
Cash and cash equivalents,
net, end of the period 60.4 55.0
For the purpose of the statements of
cash flow, cash and cash equivalents comprise the
following:
(Expressed in millions of Euro)
31-Dec-18
31-Dec-17
Cash and cash equivalents, end of the period 62.1 55.0
Bank overdrafts repayable on demand and
used for cashmanagement purposes
(1.8) 0.0
Cash and cash equivalents, net, end of
the period 60.4 55.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190410005809/en/
NATUZZI INVESTOR RELATIONSPiero Direnzo | tel.
+39.080.8820.812 | pdirenzo@natuzzi.com
NATUZZI CORPORATE COMMUNICATION-Vito Basile (Press
Office) | tel. +39.080.8820.676 | vbasile@natuzzi.com
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