Natuzzi: FULL YEAR 2007 FINANCIAL HIGHLIGHTS TOTAL NET SALES DOWN
BY 13.7% AT EUR 634.4 MILLION AND SEATS SOLD DOWN BY 14.1% OVER
2006 OPERATING LOSS OF EUR 49.1 MILLION, VERSUS OPERATING INCOME OF
EUR 16.5 MILLION IN 2006 NET LOSSES AT EUR 62.6 MILLION VERSUS NET
EARNINGS OF EUR 12.3 MILLION IN 2006 The Board of Directors of
Natuzzi S.p.A. (NYSE: NTZ) (�Natuzzi� or �the Group�), the world�s
leading manufacturer of leather-upholstered furniture, today
presented the fourth quarter 2007 financial results and the project
of the consolidated financial statements for the full year 2007.
NET SALES Natuzzi total net sales during the fourth quarter of 2007
decreased by 8.4 percent at EUR 176.9 million from EUR 193.1
million reported in the same quarter of 2006. Units sold in the
last three months of 2007 decreased by 5.1 percent. Considering the
whole 2007, total net sales were at EUR 634.4 million, down 13.7
percent as compared to EUR 735.5 million reported for the year
ended on December 31, 2006. In the fourth quarter of 2007
upholstery net sales were at EUR 157.2 million, down 9.8 percent
with respect to the previous year same quarter. Other sales
(principally living-room accessories and raw material produced by
the Group and sold to third parties) increased by 4.2 percent at
EUR 19.7 million over fourth quarter 2006. During the last three
months of 2007, net sales in the Americas decreased by 6.8 percent
at EUR 54.5 million with respect to 2006 fourth quarter and by 12.7
percent at EUR 89.2 million in Europe. Net sales in the rest of the
world were flat at EUR 13.5 million. Twelve new stores were opened
in 2007 fourth quarter (4 in UK, 2 in France and 1 each in Italy,
Latvia, Netherlands, Australia, Taiwan, Mexico), thus bringing the
total number of stores (Natuzzi Stores and Divani & Divani by
Natuzzi) to 302 as of December 31, 2007. As of the same date, there
were 483 Natuzzi Galleries worldwide. Leather upholstered furniture
net sales during 2007 fourth quarter decreased by 6.3 percent at
EUR 142.9 million and fabric upholstered net sales by 34.1 percent
at EUR 14.3 million. During the last quarter of 2007, net sales for
the Natuzzi branded products were at EUR 91.4 million, down 16.1
percent from EUR 108.9 million reported in 2006 same quarter,
whereas Italsofa products increased by 0.8 percent at EUR 65.8
million. GROSS & OPERATING RESULTS For the fourth quarter of
2007 the Group reported a gross profit of EUR 43.2 million, down
from EUR 58.5 million in 2006 fourth quarter. In the same period,
gross margin decreased at 24.4 percent from 30.3 percent in 2006
comparable quarter. Considering the whole 2007 the Group had a
gross profit of EUR 173.8 million as compared to a gross profit of
EUR 244.9 million in 2006. For the twelve month period, gross
margin decreased from 33.3 percent in 2006 to 27.4 percent in 2007.
During the last three months of 2007 the Group reported a net
operating loss of EUR 20.9 million as compared to a net operating
loss of EUR 3.4 million in the previous year comparable quarter.
For the twelve month period ended on December 31, 2007, the Group
reported a net operating loss of EUR 49.1 million, versus a net
operating income of EUR 16.5 million in 2006. FOREX AND TAXES In
the fourth quarter of 2007 the Group had a net foreign exchange
loss of EUR 2.3 million as compared to a net foreign exchange gain
of EUR 2.8 million in 2006 same quarter. Group�s income taxes in
the last quarter of 2007 were at EUR 16.6 million, as compared to
income taxes of EUR 1.0 million in 2006 last quarter. NET RESULT
AND GROUP EARNINGS PER COMPANY�S SHARE For the quarter ended on
December 31, 2007, the Group reported net losses of EUR 39.6
million (or EUR 0.72 losses per share), versus Group�s net losses
of EUR 5.1 million (or EUR 0.09 losses per share) in the fourth
quarter of 2006. Considering the whole 2007, the Group had net
losses of EUR 62.6 million (or EUR 1.14 losses per share), versus
net earnings of EUR 12.3 million (or EUR 0.22 earnings per share)
reported for the year 2006. Pasquale Natuzzi, Chairman and CEO,
commented: �In 2007 the Group went through an increasingly
difficult macroeconomic environment, still affecting the furniture
industry today, coupled with the steady strengthening of the Euro
against the US dollar. Besides, in last December our
Natuzzi-branded production and deliveries were negatively impacted
by exceptional bad weather conditions at the Italian manufacturing
sites as well as by a nation-wide strike of the transportation
workers. As a result of the above, the Group reported a
double-digit net sales decrease year over year, in particular in
the medium-high segment manufactured in Italy�. �Due to lower
volume sales, unfavourable currency conversion of US revenues,
higher raw material prices and the poor performance of our retail
network and South-American manufacturing plants, the Group reported
disappointing operating losses in the fourth quarter and full year
2007, but still maintains a sound net financial position�. Mr.
Natuzzi concluded: �Top management is working on the operational
details of a three years business plan covering the period
2008-2010 which will be ready in the next few weeks. As far as 2008
is concerned, year-to-date seats sold have increased at low
double-digit rate compared to the same period of 2007 also because
of accumulated back-log at the end of last year. In addition to
that, we expect a good market response for our new collections at
the forthcoming High Point and Milan International fairs. In light
of the aforesaid, we should increase unit sales in the region of 10
percent on a yearly basis and, through a more efficient cost
structure, also break even at the operating level.� FOURTH QUARTER
2007 TELECONFERENCE Pasquale Natuzzi, Chief Executive Officer and
Chairman, Salvatore Gaipa, Chief Financial Officer and Nicola
Dell�Edera, Finance Director, will discuss financial results,
followed by a question and answer session, in a teleconference at
10:00 a.m. New York time (3:00 p.m. London time � 4:00 p.m. Italian
time) on Tuesday April 1, 2008. ABOUT NATUZZI S.P.A. Founded in
1959 by Pasquale Natuzzi, Natuzzi S.p.A. designs and manufactures a
broad collection of leather-upholstered residential furniture.
Italy�s largest furniture manufacturer, Natuzzi is the global
leader in the leather segment, exporting its innovative,
high-quality sofas and armchairs to 123 markets on 5 continents.
Since 1990, Natuzzi has sold its furnishings in Italy through the
popular Divani & Divani by Natuzzi chain of 125 stores, and 1
Natuzzi Store. Outside Italy, the Company sells to various
furniture retailers, as well as through 173 licensed Divani &
Divani by Natuzzi and Natuzzi Stores. Natuzzi S.p.A. was listed on
the New York Stock Exchange on May 13, 1993. The Company is ISO
9001 and 14001 certified. FORWARD-LOOKING STATEMENTS Statements in
this press release other than statements of historical fact are
�forward-looking statements�. Forward�looking statements are based
on management�s current expectations and beliefs and therefore you
should not place undue reliance on them. These statements are
subject to a number of risks and uncertainties, including risks
that may not be subject to the Group�s control, that could cause
actual results to differ materially from those contained in any
forward-looking statement. These risks include, but are not limited
to, fluctuations in exchange rates, economic and weather factors
affecting consumer spending, competitive and regulatory
environment, as well as other political, economical and
technological factors, and other risks identified from time to time
in the Group�s filings with the Securities and Exchange Commission,
particularly in the Group�s annual report on Form 20-F. Forward
looking statements speak as of the date they were made, and the
Group undertakes no obligation to update publicly any of them in
light of new information or future events. NATUZZI S.P.A. AND
SUBSIDIARIES Unaudited Consolidated Statement of Earnings for the
quarters ended on December 31, 2007 and 2006 on the basis of
Italian GAAP (Expressed in millions of EUR except per share data) �
� Three months ended on Abs. Diff. % Over � Percent of Sales �
31-Dec-07 � 31-Dec-06 � (Under) 31-Dec-07 � 31-Dec-06 Upholstery
net sales 157.2 174.2 (17.0) (9.8)% 88.9% 90.2% Other sales 19.7
18.9 0.8 4.2% 11.1% 9.8% Total Net Sales 176.9 193.1 (16.2) (8.4)%
100.0% 100.0% Purchases (84.5) (80.5) (4.0) (5.0)% (47.8)% (41.7)%
Labor (28.4) (29.2) 0.8 2.7% (16.1)% (15.1)% Third-party
Manufacturers (5.4) (4.3) (1.1) (25.6)% (3.1)% (2.2)% Manufacturing
Costs (12.1) (8.6) (3.5) (40.7)% (6.8)% (4.5)% Inventories, net
(3.3) (12.0) 8.7 72.5% (1.9)% (6.2)% Cost of Sales (133.7) (134.6)
0.9 0.7% (75.6)% (69.7)% Gross Profit 43.2 58.5 (15.3) (26.2)%
24.4% 30.3% Selling Expenses (49.9) (49.0) (0.9) (1.8)% (28.2)%
(25.4)% General and Administrative Expenses (14.2) (12.9) (1.3)
(10.1)% (8.0)% (6.7)% Operating Income (Loss) (20.9) (3.4) (17.5)
(514.7)% (11.8)% (1.8)% Interest Income, net 0.4 0.7 (0.3) 0.2%
0.4% Foreign Exchange, net (2.3) 2.8 (5.1) (1.3)% 1.5% Other
Income, net (0.5) (4.3) 3.8 (0.3)% (2.2)% Earnings (Losses) before
taxes and minority interest (23.3) (4.2) (19.1) (454.8)% (13.2)%
(2.2)% Income taxes (16.6) (1.0) (15.6) (9.4)% (0.5)% Earnings
(Losses) before minority interest (39.9) (5.2) (34.7) (667.3)%
(22.6)% (2.7)% Minority Interest (0.3) (0.1) (0.2) (0.2)% (0.1)%
Net Earnings (Losses) (39.6) (5.1) (34.5) (676.5)% (22.4)% (2.6)%
Earnings (Losses) Per Share (0.72) (0.09) (0.63) � � � Average
Number of Shares Outstanding* 54,824,227 54,738,538 � � � � (*) Net
of shares repurchased � � � � � � � � � � � � Key Figures in U.S.
dollars (millions) Three months ended on Abs. Diff. % Over Percent
of Sales � � 31-Dec-07 31-Dec-06 � � (Under) 31-Dec-07 31-Dec-06
Total Net Sales 256.2 249.0 7.2 2.9% 100.0% 100.0% Gross Profit
62.6 75.4 (12.8) (17.0)% 24.4% 30.3% Operating Income (Loss) (30.3)
(4.4) (25.9) (588.6)% (11.8)% (1.8)% Net Earnings (Losses) (57.3)
(6.6) (50.7) (768.2)% (22.4)% (2.7)% Earnings (Losses) per Share
(1.04) (0.12) (0.94) Average exchange rate (U.S. dollar per Euro)
1.4480 � 1.2894 � � � � � NATUZZI S.P.A. AND SUBSIDIARIES Unaudited
Consolidated Statement of Earnings for the years ended on December
31, 2007 and 2006 on the basis of Italian GAAP (Expressed in
millions of EUR except per share data) � � Twelve months ended on
Abs. Diff. % Over Percent of Sales � 31-Dec-07 � 31-Dec-06 �
(Under) 31-Dec-07 � 31-Dec-06 Upholstery net sales 563.5 660.3
(96.8) (14.7)% 88.8% 89.8% Other sales 70.9 75.2 (4.3) (5.7)% 11.2%
10.2% Total Net Sales 634.4 735.5 (101.1) (13.7)% 100.0% 100.0%
Purchases (308.2) (313.2) 5.0 1.6% (48.6)% (42.6)% Labor (101.7)
(109.4) 7.7 7.0% (16.0)% (14.9)% Third-party Manufacturers (16.5)
(19.6) 3.1 15.8% (2.6)% (2.7)% Manufacturing Costs (41.1) (33.1)
(8.0) (24.2)% (6.5)% (4.5)% Inventories, net 6.9 (15.3) 22.2 145.3%
1.1% (2.1)% Cost of Sales (460.6) (490.6) 30.0 6.1% (72.6)% (66.7)%
Gross Profit 173.8 244.9 (71.1) (29.0)% 27.4% 33.3% Selling
Expenses (173.9) (186.2) 12.3 6.6% (27.4)% (25.3)% General and
Administrative Expenses (49.0) (42.2) (6.8) (16.1)% (7.7)% (5.7)%
Operating Income (Loss) (49.1) 16.5 (65.6) (397.4)% (7.7)% 2.2%
Interest Income, net 1.7 1.5 0.2 0.3% 0.2% Foreign Exchange, net
(7.1) 0.8 (7.9) (1.1)% 0.1% Other Income, net 2.8 0.5 2.3 0.4% 0.1%
Earnings (Losses) before taxes and minority interest (51.7) 19.3
(71.0) (367.7)% (8.1)% 2.6% Income taxes (11.4) (7.1) (4.3) (1.8)%
(1.0)% Earnings (Losses) before minority interest (63.1) 12.2
(75.3) (617.0)% (9.9)% 1.7% Minority Interest (0.5) (0.1) (0.4)
(0.1)% (0.0)% Net Earnings (Losses) (62.6) 12.3 (74.9) (608.7)%
(9.9)% 1.7% Earnings (Losses) Per Share (1.14) 0.22 (1.36) � � �
Average Number of Shares Outstanding* 54,824,227 54,738,538 � � � �
(*) Net of shares repurchased � � � � � � � � � � � � Key Figures
in U.S. dollars (millions) Twelve months ended on Abs. Diff. % Over
Percent of Sales � � 31-Dec-07 31-Dec-06 � � (Under) 31-Dec-07
31-Dec-06 Total Net Sales 869.2 924.2 (55.0) (5.9)% 100.0% 100.0%
Gross Profit 238.2 307.7 (69.6) (22.6)% 27.4% 33.3% Operating
Income (Loss) (67.2) 20.7 (88.0) (424.3)% (7.7)% 2.2% Net Earnings
(Losses) (85.7) 15.5 (101.2) (654.7)% (9.9)% 1.7% Earnings (Losses)
per Share (1.56) 0.28 (1.84) Average exchange rate (U.S. dollar per
Euro) � 1.3701 � 1.2565 � � � � � � GEOGRAPHIC BREAKDOWN � � � � �
� � � � � � � � � � � � � � Sales* Seat Units Three months ended on
Abs. Diff. % Over Three months ended on Abs. Diff. % Over 31-Dec-07
� 31-Dec-06 � (Under) 31-Dec-07 � 31-Dec-06 � (Under) Americas 54.5
58.5 (4.0) (6.8%) 343,928 328,872 15,056 4.6% % of total 34.7%
33.6% 46.4% 42.1% Europe 89.2 102.2 (13.0) (12.7%) 337,053 394,338
(57,285) (14.5%) % of total 56.7% 58.7% 45.5% 50.5% Rest of the
world 13.5 13.5 0.0 0.0% 60,024 57,372 2,652 4.6% % of total 8.6%
7.7% � � 8.1% 7.4% � � TOTAL 157.2 � 174.2 � (17.0) � (9.8%)
741,005 � 780,582 � (39,577) � (5.1%) * Expressed in millions of
EUR � � � � � � � � � � � � � � � � � � BREAKDOWN BY COVERING � � �
� � � � � � � � � � � � � Sales* Seat Units Three months ended on
Abs. Diff. % Over Three months ended on Abs. Diff. % Over �
31-Dec-07 � 31-Dec-06 � (Under) 31-Dec-07 � 31-Dec-06 � (Under)
Leather 142.9 152.5 (9.6) (6.3%) 672,667 670,025 2,642 0.4% % of
total 90.9% 87.5% 90.8% 85.8% Fabric 14.3 21.7 (7.4) (34.1%) 68,338
110,557 (42,219) (38.2%) % of total 9.1% 12.5% 9.2% 14.2% Total
157.2 � 174.2 � (17.0) � (9.8%) 741,005 � 780,582 � (39,577) �
(5.1%) * Expressed in millions of EUR � � � � � � � � � � � � � � �
� � � BREAKDOWN BY BRAND � � � � � � � � � � � � � � � � Sales*
Seat Units Three months ended on Abs. Diff. % Over Three months
ended on Abs. Diff. % Over 31-Dec-07 � 31-Dec-06 � (Under)
31-Dec-07 � 31-Dec-06 � (Under) Natuzzi 91.4 108.9 (17.5) (16.1%)
318,382 399,207 (80,825) (20.2%) % of total 58.1% 62.5% 43.0% 51.1%
Italsofa 65.8 65.3 0.5 0.8% 422,623 381,375 41,248 10.8% % of total
41.9% 37.5% 57.0% 48.9% TOTAL 157.2 � 174.2 � (17.0) � (9.8%)
741,005 � 780,582 � (39,577) � (5.1%) * Expressed in millions of
EUR � � GEOGRAPHIC BREAKDOWN � � � � � � � � � � � � � � � � � � �
� � Sales* Seat Units Twelve months ended on � Abs. Diff. % Over
Twelve months ended on � Abs. Diff. � % Over � 31-Dec-07 �
31-Dec-06 � (Under) 31-Dec-07 � 31-Dec-06 � (Under) Americas 198.6
� 245.4 (46.8) (19.1%) 1,176,585 � 1,364,873 (188,288) (13.8%) % of
total 35.2% 37.2% 45.4% 45.2% Europe 319.4 366.6 (47.2) (12.9%)
1,225,882 1,449,696 (223,814) (15.4%) % of total 56.7% 55.5% 47.3%
48.1% Rest of the world 45.5 48.3 (2.8) (5.8%) 189,926 202,133
(12,207) (6.0%) % of total 8.1% 7.3% � � 7.3% 6.7% � � TOTAL �
563.5 � 660.3 � (96.8) (14.7%) 2,592,393 � 3,016,702 � (424,309)
(14.1%) * Expressed in millions of EUR � � � � � � � � � � � � � �
� � � � BREAKDOWN BY COVERING � � � � � � � � � � � � � � � �
Sales* Seat Units Twelve months ended on Abs. Diff. % Over Twelve
months ended on Abs. Diff. % Over � 31-Dec-07 � 31-Dec-06 � (Under)
31-Dec-07 � 31-Dec-06 � (Under) Leather 502.9 573.1 (70.2) (12.2%)
2,291,515 2,544,174 (252,659) (9.9%) % of total 89.2% 86.8% 88.4%
84.3% Fabric 60.6 87.2 (26.6) (30.5%) 300,878 472,528 (171,650)
(36.3%) % of total 10.8% 13.2% 11.6% 15.7% Total � 563.5 � 660.3 �
(96.8) (14.7%) 2,592,393 � 3,016,702 � (424,309) (14.1%) *
Expressed in millions of EUR � � � � � � � � � � � � � � � � � �
BREAKDOWN BY BRAND � � � � � � � � � � � � � � � � Sales* Seat
Units Twelve months ended on Abs. Diff. % Over Twelve months ended
on Abs. Diff. % Over � 31-Dec-07 � 31-Dec-06 � (Under) 31-Dec-07 �
31-Dec-06 � (Under) Natuzzi 336.1 416.2 (80.1) (19.2%) 1,171,651
1,506,981 (335,330) (22.3%) % of total 59.6% 63.0% 45.2% 50.0%
Italsofa 227.4 244.1 (16.7) (6.8%) 1,420,742 1,509,721 (88,979)
(5.9%) % of total 40.4% 37.0% 54.8% 50.0% TOTAL � 563.5 � 660.3 �
(96.8) (14.7%) 2,592,393 � 3,016,702 � (424,309) (14.1%) *
Expressed in millions of EUR � � NATUZZI S.P.A. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheet as of December 31, 2007 and
2006 (Expressed in millions of EUR) � � � 31-Dec-07 31-Dec-06
ASSETS Current Assets: Cash and cash equivalents 87.5 128.1
Marketable debt securities 0.0 0.0 Trade receivables, net 117.7
119.3 Other receivables 47.8 44.7 Inventories 107.3 100.3
Unrealized foreign exchange gains 0.9 5.5 Prepaid expenses and
accrued income 1.8 2.0 Deferred income taxes 1.3 7.5 Total current
assets 364.3 407.4 Non-Current Assets: Net property, plant and
equipment 235.9 246.3 Treasury shares 0.0 0.0 Other assets 17.3
18.7 Deferred income taxes 0.0 2.3 TOTAL ASSETS 617.5 674.7
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities:
Short-term borrowings 7.6 3.8 Current portion of long-term debt 0.3
0.3 Accounts payable-trade 89.3 79.5 Accounts payable-other 29.2
22.5 Accounts payable shareholders for dividends 0.6 0.6 Unrealized
foreign exchange losses 0.0 0.0 Income taxes 1.6 4.6 Salaries,
wages and related liabilities 17.5 21.7 Total current liabilities
146.1 133.0 Long-Term Liabilities: Employees� leaving entitlement
33.3 35.3 Long-term debt 2.1 2.4 Deferred income taxes 0.0 0.0
Deferred income for capital grants 13.3 14.1 � Other liabilities
10.9 10.5 Minority Interest 0.2 0.6 Shareholders� Equity: Share
capital 54.8 54.7 Reserves 42.3 42.3 Additional paid-in capital 8.3
8.3 Retained earnings 306.2 373.5 Total shareholders� equity 411.6
478.8 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 617.5 674.7 �
NATUZZI S.P.A. AND SUBSIDIARIES Unaudited Consolidated Statement of
Cash Flows as of December 31, 2007 and 2006 (Expressed in millions
of EUR) � � � � 31-Dec-07 31-Dec-06 Cash flows from operating
activities: Net earnings (losses) (62.6) 12.3 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 30.8 30.5 Employees' leaving
entitlement (1.9) 2.9 Deferred income taxes 8.5 (2.1) Minority
interest (0.5) (0.1) (Gain) loss on disposal of assets 1.3 0.8
Unrealized foreign exchange (losses) / gain 4.5 (10.2) Deferred
income for capital grants (1.0) (1.1) Change in assets and
liabilities: Receivables, net 1.5 4.3 Inventories (6.9) 15.5
Prepaid expenses and accrued income 0.1 0.6 Other assets (3.1) 1.4
Accounts payable 9.7 6.0 Income taxes (3.0) 1.7 Salaries, wages and
related liabilities (4.1) (0.4) Other liabilities 11.6 4.8 � Total
adjustments 47.5 54.6 � NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES (15.1) 66.9 � Cash flows from investing activities:
Property, plant and equipment: Additions (26.7) (20.0) Disposals
0.5 0.3 Government grants received 0.0 0.6 Marketable debt
securities: Proceeds from sales 0.0 0.0 Purchase of business, net
of cash acquired (0.2) (3.3) Disposal of business 0.0 0.0 NET CASH
USED BY INVESTING ACTIVITIES (26.4) (22.4) Cash flows from
financing activities: Long term debt: Proceeds 0.0 0.4 Repayments
(0.3) (1.6) Short-term borrowings 3.8 (4.0) Dividends paid to
shareholders 0.0 0.0 Dividends paid to minority shareholders 0.0
0.0 NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 3.5 (5.2)
Effect of translation adjustments on cash (2.6) (0.9) INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS (40.6) 38.4 Cash and cash
equivalents, beginning of the year 128.1 89.7 CASH AND CASH
EQUIVALENTS, END OF THE PERIOD 87.5 � 128.1
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