The Board of Directors of Natuzzi S.p.A. (NYSE:NTZ), Italy’s
largest furniture manufacturer and world’s leading manufacturer of
leather-upholstered furniture, today announced its financial
results for the second quarter and first six months of 2010.
SECOND QUARTER 2010 SUMMARY:
- Upholstery Net Sales were €130.9
million, up 12.0% as compared to the second quarter of 2009
- Total Net Sales were €145.2 million, up
8.7% as compared to the same period of 2009
- Industrial margin was €54.6 million,
versus €50.5 million recorded in the second quarter of 2009
- Operating Income was €2.2 million, as
compared to €1.1 million for the same period of 2009
- Net group loss was €2.8 million versus
a loss of €3.9 million recorded in the same quarter of 2009
- Positive net cash position of €49.0
million
Second Quarter Results 2010
Total Net Sales (including raw materials and
semi-finished products sold to third parties) were €145.2 million,
an increase of 8.7% as compared to corresponding period of
2009.
Upholstery net sales were €130.9 million, up 12.0% as compared
to the same period of 2009.
The contribution to upholstery net sales by geographic area was
as follows: Europe (excluding Italy) 40.1%, Americas 37.4%, Italy
10.0% and Rest of the World 12.5%.
The major commercial performances came from North America
(+38%), Asia-Oceania (+42%) and Great Britain (+49%).
Industrial margin was €54.6 million, showing an increase
of 8.1% versus the same quarter of 2009. The increase of volumes
sold and the major internal efficiencies enabled the group to
offset the consequences of significant increases in raw material
costs, in particular leather.
Transportation costs were negatively influenced by a significant
increase in freight fares.
At the same time, an increase in terms of sales commissions was
recorded due to the better performance in terms of sales in those
geographical areas operated by some sales agents who are
compensated through commissions on turnover
In order to reduce the impact generated by the above mentioned
increases, the Group has implemented a further containment plan to
its cost structure.
The EBITDA of the Group recorded an improvement to €8.2 million
as compared to €7.9 over the corresponding period of 2009.
Operating income also improved to €2.2 million with
respect to €1.1 million recorded at the corresponding period of
2009.
Net Group Result shows a loss of €2.8 million recovering
from the loss of €3.9 million recorded in the same period of last
year despite the effects of a higher tax burden.
First Six Months Results 2010
Total net sales for the first six months of 2010 were €271.7
million up 10.9% as compared to the same period of 2009.
Upholstery net sales were €242.2 million, an increase of 13.3%
with respect to the same period of 2009.
The contribution to upholstery net sales by geographic area was
as follows: Europe (excluding Italy) 41.2%, Americas 35.1%, Italy
11.8% and Rest of the World 11.9%.
Industrial margin considerably improved to 38.0% on net
sales compared to 32.2% thanks to some intense activities initiated
in 2009 aimed at obtaining an industrial rationalization.
EBITDA recorded a profit of €15.0 million versus a loss
of €1.5 million in the same period of 2009.
Operating income was €2.7 million as compared to a loss
of €15.4 million reported in the first six months of 2009.
Net Group Result recorded a loss of €4.1 million, an
appreciable improvement as compared to the €14.2 million loss
reported in the same period of last year despite the increase of
extraordinary costs tax burden.
Net Financial Position as of June 30, 2010 remains
positive at €49.0 million although it decreased compared to
December 31, 2009 mainly due to some major investments in working
capital as a consequence of the increase in volumes of sales.
Pasquale Natuzzi, Chairman and Chief Executive Officer of
Natuzzi S.p.A., commented: “Having recorded an operating income for
the fifth consecutive quarter, despite a general situation which
continues to be very uncertain, is a confirmation of the
effectiveness of the work done so far.
Net sales for the first six months of the year went up compared
to 2009 although the market recovery seems to be slower and below
than originally expected. The strong financial position confirms
the solidity of the Group and its ability to invest in strategic
projects. Our focus remains on product and process innovation, cost
reduction in all areas of business management, with the objective
of improving the quality of our offer and service, recovering
competitiveness, returning to profitability and maintaining the
leadership in the field”.
The Company will host a conference call on Tuesday September 28,
2010 at 10:00 a.m. Eastern Time to discuss second quarter and first
half 2010 financial results. To participate, dial toll-free
1-877-591-4959 and dial international 1-719-325-4863. A live web
cast of the conference call will be available online at
http://www.natuzzi.com/ under the Investor Relations section.
A replay of the call will be available shortly after the
completion of the conference call through October 28, 2010. To
access the telephone replay, participants should dial
1-877-870-5176 for domestic calls and 1-858-384-5517 for
international calls. The access code for the replay is: 2145933
About Natuzzi
Founded in 1959 by Pasquale Natuzzi, Natuzzi S.p.A. designs and
manufactures a broad collection of residential upholstered
furniture. With consolidated revenues of EUR 515.4 million in 2009,
Natuzzi is Italy's largest furniture manufacturer. Natuzzi Group
exports its innovative high-quality sofas and armchairs to 130
markets on five continents under two brands, Natuzzi and Italsofa.
Cutting-edge design, superior Italian craftsmanship and advanced,
vertically integrated manufacturing operations underpin the
Company's market leadership. Natuzzi S.p.A. has been listed on the
New York Stock Exchange since May 1993. The Company is ISO 9001 and
14001
Natuzzi S.p.A. and Subsidiaries Unaudited
Consolidated Profit & Loss for the quarter ended on June 30,
2010 on the basis of Italian GAAP (expressed in millions Euro
except for share data)
Three months ended on
Change Percent of Sales
30-Jun-10 30-Jun-09 %
30-Jun-10 30-Jun-09 Upholstery
net sales 130.9 116.9 12.0% 90.2% 87.5% Other sales 14.3
16.7 -14.4% 9.8% 12.5%
Total Net
Sales 145.2 133.6
8.7% 100.0% 100.0%
Consumption (*) (58.9) (54.6) 7.9% -40.6% -40.9% Labor (20.6)
(20.2) 2.0% -14.2% -15.1% Third-party manufacturers (0.7) (0.6)
16.7% -0.5% -0.4% Industrial Costs (10.4) (7.7) 35.1% -7.2% -5.8%
of which Depreciation, Amortization (2.9) (3.5)
Cost of Sales
(90.6) (83.1) 9.0%
-62.4% -62.2%
Industrial
Margin 54.6 50.5 8.1%
37.6% 37.8% Selling Expenses
(41.0) (37.2) 10.2% -28.2% -27.8% of which Transportation (13.5)
(10.7) 26.2% of which Advertising (6.4) (8.9) -28.1% of which
Depreciation, Amortization (2.0) (2.2) G&A Expenses (11.4)
(12.2) -6.6% -7.9% -9.1% of which Depreciation, Amortization (1.1)
(1.1)
EBITDA 8.2
7.9 3.8% 5.6% 5.9%
Operating Income/(Loss) (EBIT)
2.2 1.1 100.0%
1.5% 0.8% Interest Income/(Costs), Net
(0.3) (0.3) Foreign Exchange, Net 1.2 (0.6) Other Income/(Cost),
Net (2.6) (1.7)
Earning before Income Taxes
0.5 (1.5)
0.3% -1.1% Current taxes (3.2) (2.3)
-2.2% -1.7%
Net result (2.7)
(3.8) 28.9% -1.9%
-2.8% Minority interest 0.1 0.1
Net
Group Result (2.8) (3.9)
28.2% -1.9% -2.9%
Net Group Result per Share (0.05)
(0.07)
Key Figures in U.S. dollars Three
months ended on Change Percent of
Sales (millions)
30-Jun-10
30-Jun-09 % 30-Jun-10
30-Jun-09 Total Net Sales 184.9 170.1
8.7% 100.0% 100.0% Gross Profit
69.5 64.3
8.1% 37.6% 37.8% Operating
Income (Loss) 2.8 1.4
100.0% 1.5%
0.8% Net Group Result (3.6) (5.0)
28.2%
-1.9% -2.9% Net Group Result per Share
(0.1) (0.1)
Average exchange rate (U.S.$ per
€) 1.2734
(*) Purchases plus
beginning stock minus final stock
UPHOLSTERY NET
SALES BREAKDOWN Geographic
breakdown Net sales million euro Net sales seats
three months ended on three months ended on
30-Jun-10
30-Jun-09 Change %
30-Jun-10 30-Jun-09
Change % Americas 48.9
37.4% 33.0 28.2% 48.2% 259,429
47.5% 182,269 37.4% 42.3% Natuzzi 3.2
2.5% 4.1 3.5% -22.0% 8,234 1.5% 11,226 2.3% -26.7% All brands (*)
45.7 34.9% 28.9 24.7% 58.1% 251,195 46.0% 171,043 35.1% 46.9%
Europe 52.5 40.1% 58.2
49.8% -9.8% 186,053 34.0%
213,498 43.8% -12.9% Natuzzi 26.5 20.2% 31.0
26.5% -14.5% 53,882 9.9% 74,554 15.3% -27.7% All brands (*) 26.0
19.9% 27.2 23.3% -4.4% 132,171 24.1% 138,944 28.5% -4.9%
Italy (Natuzzi) 13.1 10.0% 14.1
12.1% -7.1% 40,462 7.4% 43,655
9.0% -7.3% Rest of the world
16.4 12.5% 11.6 9.9% 41.4%
60,505 11.1% 48,094 9.9% 25.8%
Natuzzi 8.9 6.8% 6.6 5.6% 34.8% 20,790 3.8% 16,934 9.0%
22.8% All brands (*) 7.5 5.7% 5.0 4.3% 50.0% 39,715 7.3%
31,160 6.4% 27.5%
Total 130.9
100.0% 116.9 100.0% 12.0%
546,449 100.0% 487,516 100.0%
12.1% Brands breakdown Net sales
million euro Net sales seats three months
ended on three months ended on
30-Jun-10 30-Jun-09
Change % 30-Jun-10
30-Jun-09 Change %
Natuzzi 51.7 39.5% 55.8 47.7%
-7.3% 123,368 22.6% 146,369
30.0% -15.7% All brands (*) 79.2
60.5% 61.1 52.3% 29.6% 423,081
77.4% 341,147 70.0% 24.0%
Total 130.9 100.0% 116.9
100.0% 12.0% 546,449 100.0%
487,516 100.0% 12.1%
(*) Italsofa, Natuzzi Editions, Editions and unbranded
Natuzzi S.p.A. and Subsidiaries Unaudited
Consolidated Profit & Loss for six months ended on June 30,
2010 on the basis of Italian GAAP (expressed in millions Euro
except for share data)
Six months ended on
Change Percent of Sales
30-Jun-10 30-Jun-09 %
30-Jun-10 30-Jun-09 Upholstery
net sales 242.2 213.8 13.3% 89.1% 87.3% Other sales 29.5
31.1 -5.1% 10.9% 12.7%
Total Net
Sales 271.7 244.9
10.9% 100.0% 100.0%
Consumption (*) (105.8) (105.0) 0.8% -38.9% -42.9% Labor (40.2)
(40.1) 0.2% -14.8% -16.4% Third-party manufacturers (1.6) (1.9)
-15.8% -0.6% -0.8% Industrial Costs (20.8) (19.0) 9.6% -7.7% -7.8%
of which Depreciation, Amortization (6.0) (7.4)
Cost of Sales
(168.4) (166.0) 1.5%
-62.0% -67.8%
Industrial Margin 103.3 78.9
30.9% 38.0% 32.2%
Selling Expenses (78.7) (71.3) 10.4% -29.0% -29.1% of which
Transportation (25.1) (19.7) of which Advertising (12.7) (14.6) of
which Depreciation, Amortization (4.1) (4.4) G&A Expenses
(21.8) (23.0) -5.2% -8.0% -9.4% of which Depreciation, Amortization
(2.2) (2.1)
EBITDA 15.0
(1.5) 1102.0% 5.5%
-0.6%
Operating Income/(Loss) (EBIT)
2.7 (15.4) 117.7%
1.0% -6.3% Interest Income/(Costs), Net
(0.6) (0.6) Foreign Exchange, Net 2.0 5.7 Other Income/(Cost), Net
(2.3) 0.1
Earning before Income Taxes
1.8 (10.2) 117.9%
0.7% -4.2% Current taxes (5.8) (3.8)
-2.1% -1.6%
Net result (4.0)
(14.0) 71.7% -1.5%
-5.7% Minority interest 0.1 0.2
Net
Group Result (4.1) (14.2)
71.4% -1.5% -5.8%
Net Group Result per Share (0.07)
(0.26)
Key Figures in U.S. dollars Six months ended
on Change Percent of Sales (millions)
30-Jun-10 30-Jun-09 %
30-Jun-10 30-Jun-09 Total Net
Sales 360.9 325.3
10.9% 100.0%
100.0% Gross Profit 137.2 104.8
30.9%
38.0% 32.2% Operating Income (Loss) 3.6
(20.5)
-117.7% 1.0% -6.3% Net Group
Result (5.4) (18.9)
71.4% -1.5%
-5.8% Net Group Result per Share (0.1) (0.3)
Average exchange rate (U.S.$ per €) 1.3283
(*) Purchases plus beginning stock minus final
stock
UPHOLSTERY NET SALES BREAKDOWN
Geographic breakdown Net sales million euro Net
sales seats six months ended on six months
ended on 30-Jun-10
30-Jun-09 Change %
30-Jun-10 30-Jun-09
Change % Americas 84.9
35.1% 62.4 29.2% 36.1% 457,123
45.1% 342,073 38.0% 33.6% Natuzzi 7.6
3.1% 7.8 3.6% -2.6% 19,781 2.0% 22,343 2.5% -11.5% All brands (*)
77.3 31.9% 54.6 25.5% 41.6% 437,342 43.2% 319,730 35.5% 36.8%
Europe 99.7 41.2% 105.0
49.1% -5.0% 360,810 35.6%
393,457 43.7% -8.3% Natuzzi 51.1 21.1% 53.5
25.0% -4.5% 113,986 11.3% 128,684 14.3% -11.4% All brands (*) 48.6
20.1% 51.5 24.1% -5.6% 246,824 24.4% 264,773 29.4% -6.8%
Italy (Natuzzi) 28.7 11.8% 26.4
12.3% 8.7% 86,956 8.6% 80,762
9.0% 7.7% Rest of the world 28.9
11.9% 20.0 9.4% 44.5% 107,873
10.7% 84,010 9.3% 28.4% Natuzzi 16.7
6.9% 11.6 5.4% 44.0% 39,183 3.9% 30,201 9.0% -51.5% All brands (*)
12.2 5.0% 8.4 3.9% 45.2% 68,690 6.8% 53,809 6.0% 27.7%
Total 242.2 100.0% 213.8
100.0% 13.3% 1,012,762 100.0%
900,302 100.0% 12.5% Brands
breakdown Net sales million euro Net sales seats
six months ended on six months ended on
30-Jun-10
30-Jun-09 Change %
30-Jun-10 30-Jun-09
Change % Natuzzi 104.1
43.0% 99.3 46.4% 4.8% 259,906
25.7% 261,990 29.1% -0.8% All
brands (*) 138.1 57.0% 114.5 53.6%
20.6% 752,856 74.3% 638,312
70.9% 17.9% Total 242.2
100.0% 213.8 100.0% 13.3%
1,012,762 100.0% 900,302 100.0%
12.5%
(*) Italsofa, Natuzzi
Editions, Editions and unbranded Natuzzi S.p.A. and
Subsidiaries
Unaudited Consolidated Balance Sheets as at June
30, 2010 on the basis of Italian GAAP (Expressed in millions of
euro)
ASSETS 30 June 10
31 Dec 09 Current assets: Cash and cash
equivalents 58.9 66.3 Marketable debt securities 0.0 0.0 Trade
receivables, net 102.6 97.1 Other receivables 58.1 54.5 Inventories
87.6 81.6 Unrealized foreign exchange gains 0.1 0.3 Prepaid
expenses and accrued income 1.2 1.4 Deferred income taxes 0.7 0.7
Total current assets
309.2 301.9 Non current
assets: Net property, plant and equipment 194.3 193.9 Other
assets 11.0 12.9
Total non
current assets 205.3 206.8
TOTAL ASSETS 514.5 508.7
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Short-term borrowings 3.3
0.8 Current portion of long-term debt 1.3 1.1 Accounts
payable-trade 58.9 66.5 Accounts payable-other 29.2 29.3 Unrealized
foreign exchange losses 2.8 0.4 Accounts payable-shareholders for
dividends 0.0 0.0 Income taxes 4.0 3.7 Salaries, wages and related
liabilities 14.6 15.0
Total
current liabilities 114.1 116.8
Long-term liabilities: Employees' leaving entitlement
28.9 29.6 Long-term debt 5.3 5.9 Deferred income for capital grants
10.6 11.2 Other liabilities 18.8 18.2
Total long-term liabilities 63.6
64.9 Minority
interest 2.3 1.9
Shareholders' equity: Share capital 54.9 54.9 Reserves 12.0
12.0 Additional paid-in capital 9.3 9.3 Retained earnings 258.3
248.9
Total shareholders'
equity 334.5 325.1 TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY 514.5
508.7 Natuzzi S.p.A. and Subsidiaries
Consolidated Statements of Cash Flows
(Expressed in million of euro)
30 June 10
31 Dec 09 Cash flows from operating
activities: Net earnings (loss) (4.1 )
(17.7 ) Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 12.2 26.8 Employees' leaving
entitlement (0.7 ) (2.1 ) Deferred income taxes (0.0 ) 3.7 Minority
interest 0.1 0.4 (Gain) loss on disposal of assets (0.1 ) (0.1 )
Unrealized foreign exchange losses and gains 2.7 (4.4 ) Impairment
of long lived assets - - Deferred income for capital grants (0.4 )
(1.0 )
Non monetary operating costs 13.8 23.3
Change in assets and liabilities: Receivables, net
(5.6 ) 25.7 Inventories (6.0 ) 10.4 Prepaid expenses and accrued
income 0.2 (0.2 ) Other assets (3.5 ) (8.2 ) Accounts payable (7.6
) (2.1 ) Income taxes 0.3 1.9 Salaries, wages and related
liabilities (0.4 ) (4.3 ) Other liabilities 1.0 3.2
Net
working capital (21.6 ) 26.4
Net cash provided by operating activities
(11.9 ) 32.0
Cash flows from investing activities: Property, plant and
equipment: Additions (3.1 ) (9.2 ) Disposals 0.1 0.2 Government
grants received 1.9 Marketable debt securities: - -
Net
cash used in investing activities (3.0 )
(7.1 ) Cash flows from
financing activities: Long-term debt: Proceeds 0.6 3.9
Repayments (0.9 ) (0.7 ) Short-term borrowings 2.5 (8.9 ) Capital
injection - - Dividends paid to minority interests - -
Net cash used in financing activities
2.2 (5.7 ) Effect of translation
adjustments on cash 5.3 (0.2 )
Increase (decrease)
in cash and cash equivalents (7.4 ) 19.0
Cash and cash equivalents, beginning of the year
66.3 47.3 Cash and cash
equivalents, end of the year 58.9
66.3
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