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 approved its financial results
for the second quarter and first six months of 2011.
1H 2011 financial results
- Net Group Profit of € 6.6 million vs. a
Net Group Loss of € 4.1 million in 1H 2010
- Negative EBIT of € 8.1 million, vs. a
positive EBIT of € 2.7 million in 1H 2010
- Industrial Margin was € 83.3 million as
compared to € 103.3 million in 1H 2010
- Total Net Sales were € 242.4 million,
down 10.8% as compared to 1H 2010
2Q 2011 financial results
- Net Group Profit of € 9.6 million vs. a
Net Group Loss of € 2.8 million in 2Q 2010
- Negative EBIT of € 5.5 million, vs. a
positive EBIT of € 2.3 million in 2Q 2010
- Industrial Margin was € 40.6 million as
compared to € 54.6 million in 2Q 2010
- Total Net Sales were € 121.4 million,
down 16.4% as compared to 2Q 2010
- Positive Net Financial Position of
€61.6 with a considerable improvement as compared to December 31,
2010.
1H 2011 financial results
Total Net Sales (including raw materials and
semi-finished products sold to third parties) were € 242.4 million,
decreasing by 10.8% with respect to 2010.Total upholstery sales
totalled € 211.0 million with a decline of 12.9% over the same
period in 2010.In particular, the Natuzzi brand was down 4.2%,
while the “all brands” marked a decrease of 19.4%. Within the
Natuzzi brand, the decline is mainly concentrated in Europe, while
there is positive performance in the Americas and Rest of
World.Sales of “all brands” (-19.4%) affected in particular by the
sharp decline in North America, whose results were negatively
impacted by the relocation of existing production sites in China to
a new plant that generated delays in production today returned to
normal.Other sales have registered a total increase of 6.4% thanks
to strong sales of accessories.
Industrial margin, 34.4% of sales compared to 38.0% in
the first six months of 2010, mainly reflects the increase in
prices of raw materials and labour costs (in particular China and
Romania).
Transportation costs, showed a decline in absolute terms or €3.1
million and a percentage of sales in line with the first half of
2010.
Commissions, as well as advertising costs, registered a total
reduction versus the first six months of 2011, of €3.4 million.
Commercial and administrative costs (SG & A) allowed an
improvement in absolute terms amounted to € 2.7 million versus the
first six months 2010, although the impact on net sales rose from
21.0% in 1H 2010 to 22.4% in 1H 2011.
EBITDA amounted to € 2.0 million in 1H of 2011 versus
€14.9 million in 1H of 2010 as a result of deterioration in
EBIT, (negative for €8.1 million in 1H of 2011 as compared
to a positive margin of € 2.7 million in the same period of last
year).
Finally, the net result of the Group for 1H of 2011
recorded a profit amounted to € 6.6 million as compared to a loss
of € 4.1 million in 1H of 2010, thanks to extraordinary income from
the reimbursement obtained by the Chinese authorities for the
relocation of one of the Group factories in China.
2Q 2011 financial results
Total Net Sales for € 121.4 (including raw materials and
semi-finished products sold to third parties) while remaining in
line with sales in the first quarter of 2011, decreased by 16.4%
with respect to 2010.Total upholstery sales totalled € 105.6
million with a decline of 19.3% over the same period in 2010.The
break-down of upholstery net sales by geographic area was as
follows: Europe (excluding Italy) 40.1%, the Americas 34.4%, Italy
11.0% and Rest of the World 14.5%.
Industrial margin, 33.4% of sales compared to 37.6% in
the second quarter of 2010, mainly reflects the increase in labour
costs both in China and Romania and the further increase in prices
of raw materials.
Transportation costs, by contrast, reported a positive slowdown,
which showed a reduction in costs both in absolute terms for € 2.8
million that in terms of percentage on net sales with a decrease of
0.5%.Even commissions, as well as advertising costs have registered
a reduction in the second quarter of 2011, respectively reporting a
decrease of € 1.3 million and € 1.5 million.
The rationalization of the commercial and administrative costs
(SG & A) allowed an improvement in absolute terms amounted to €
0.6 million versus the second quarter of 2010, although the impact
on net sales rose from 20.0% in the second quarter of 2010 to 23.5%
in the second quarter of 2011.
EBITDA amounted to a negative € 0.5 million in the second
quarter of 2011 versus a positive € 8.2 million in the second
quarter of 2010 as a result of deterioration in EBIT margin, which
ended with a loss of € 5.5 million in the second quarter of 2011
compared to a positive margin of € 2.3 million in the same period
of last year.
Finally, the net result of the Group for the second
quarter of 2011 recorded a profit amounted to € 9.6 million
compared to a loss of €2.8 million in the second quarter of 2010,
thanks to the extraordinary income from the reimbursement by the
Chinese authorities to transfer one of the Chinese factories of the
Group .
Balance Sheet
A strong improvement of net financial position was recorded at
June 30, 2011 which rose from € 45.6 million at December 31, 2010
to € 61.6 million as at June 30, 2011.
Pasquale Natuzzi, Chairman and CEO of Natuzzi S.p.A.,
commented, "In the first half of 2011 the world's economies have
continued to show uncertainty which is even increasing in recent
weeks. The consequence is that the demand for consumer goods -
especially durable ones - remains to be weak and volatile.
Macroeconomic performance and some internal factors explain the
decline of the Natuzzi Group sales by 12.9%, recorded by the Group
in this first half. Specifically, however, I would emphasize that
the Natuzzi brand sales have shown signs of recovery in the
American market with + 5.3% and in the Asian market with + 3.0%. In
contrast, sales of “all brands” show a general decline, with the
largest drop recorded in the North American market. The main reason
for this decline was the relocation of the new factory in China
that led to delays in production for export to North America. This
problem has now been resolved and the new production facility has
begun to deliver faster service to the markets.We are aware of the
difficulties that still exist for the next six months due to the
difficult economic environment. Although the return to normal
production levels in China and commercial activities with the most
important customers in Europe and North America let us predict
improvement in the coming months, we will still need to wait until
next year to turn our efforts into incremental revenue. Our solid
financial position also allows us to continue investing in product
and process innovations to regain market share in more mature
markets and to grow in emerging markets like India, China and
Brazil".
The Company will host a conference call on September 26th, 2011
at 10:00 a.m. Eastern Time (4.00 pm European Continental time) to
discuss second quarter and six months 2011 financial results. To
participate, dial in toll-free 1-888-487-0361 and toll
International 1-719-325-2180. 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 26th. 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: 3906144.
About NatuzziFounded in 1959 by Pasquale Natuzzi, Natuzzi
S.p.A. designs and manufactures a broad collection of residential
upholstered furniture. With consolidated revenues of EUR 518.6
million in 2010. 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, 2011 on the basis of Italian GAAP (expressed in
millions Euro except for share data)
Three months
ended on Change Percent of Sales
June 30, 2011 June 30, 2010
% June 30, 2011 June 30, 2010
Upholstery net sales 105.6 130.9 -19.3% 87.0% 90.2% Other
sales 15.8 14.3 10.5% 13.0% 9.8%
Total Net Sales 121.4 145.2
-16.4% 100.0% 100.0%
Consumption (*) (52.1) (62.4) -16.5% -42.9% -43.0% Labor
(20.5) (20.6) -0.5% -16.9% -14.2% Industrial Costs (8.2) (7.6) 7.9%
-6.8% -5.2% of which Depreciation, Amortization (2.4)
(2.9)
Cost of
Sales (80.8) (90.6)
-10.8% -66.6% -62.4%
Industrial Margin 40.6
54.6 -25.6% 33.4%
37.6% Selling Expenses Transportation (10.7)
(13.5) 8.8% 9.3% Commissions (2.0) (3.3) -1.6% -2.3% Advertising
(4.9) (6.4) 4.0% 4.4%
Other Selling and G&A
(28.5) (29.1) 23.5% 20.0% of which Depreciation, Amortization (2.6)
(3.0)
EBITDA (0.5)
8.2 -0.4% 5.6%
EBIT (5.5) 2.3
-4.5% 1.6%
Interest Income/(Costs), Net (0.2) (0.3) Foreign Exchange, Net
(0.9) 1.1 Other Income/(Cost), Net 17.7 (2.6)
Earning
before Income Taxes 11.1 0.5
9.1% 0.3% Current taxes
(0.5) (3.2) -0.4% -2.2%
Net result
10.6 (2.7) 8.7%
-1.9% Minority interest (1.0) (0.1)
Net Group Result 9.6
(2.8) 7.9% -1.9%
Net Group Result per Share 0.18
(0.05)
Key Figures in U.S. dollars Three
months ended on Change Percent of Sales
(millions)
June 30, 2011 June 30, 2010
% June 30, 2011 June 30,
2010 Total Net Sales 174.8 209.0
-16.4% 100.0% 100.0% Industrial Profit
58.4 78.6
-25.6% 33.4% 37.6%
EBIT (7.9) 3.3
-339.1% -4.5%
1.6% Net Group Result 13.8 (4.0)
442.9%
7.9% -1.9% Net Group Result per Share
0.3 (0.1)
Average exchange rate (U.S.$ per €)
1.4395 UPHOLSTERY NET SALES BREAKDOWN
Geographic breakdown Net
sales million euro Net sales seats
three months ended on three months ended on
June 30, 2011 June 30,
2010 Change % June 30, 2011 June 30,
2010 Change % Americas 36.3
34.4% 49.0 37.4% -25.9% 201,095
45.5% 259,429 47.5% -22.5% Natuzzi 3.8
3.6% 3.3 2.5% 15.2% 11,854 2.7% 8,234 1.5% 44.0% All brands (*)
32.5 30.8% 45.7 34.9% -28.9% 189,241 42.8% 251,195 46.0% -24.7%
Europe 42.3 40.1% 52.5
40.1% -19.4% 147,630 33.4%
186,053 34.0% -20.7% Natuzzi 23.2 22.0% 26.5
20.2% -12.5% 48,244 10.9% 53,882 9.9% -10.5% All brands (*) 19.1
18.1% 26.0 19.9% -26.5% 99,386 22.5% 132,171 24.2% -24.8%
Italy (Natuzzi) 11.7 11.0% 13.1
10.0% -10.7% 33,966 7.7% 40,462
7.4% -16.1% Rest of the world
15.3 14.5% 16.3 12.5% -6.1%
59,196 13.4% 60,505 11.1% -2.2%
Natuzzi 8.4 8.0% 8.8 6.7% -4.5% 20,767 4.7% 20,790 7.4%
-0.1% All brands (*) 6.9 6.5% 7.5 5.7% -8.0% 38,429 8.7%
39,715 7.3% -3.2%
Total 105.6
100.0% 130.9 100.0% -19.3%
441,887 100.0% 546,449 100.0%
-19.1%
Brands breakdown
Net sales million euro Net sales seats
three months ended on three months ended on
June 30, 2011 June 30,
2010 Change % June 30, 2011 June 30,
2010 Change % Natuzzi 47.1
44.6% 51.7 39.5% -8.9% 114,831
26.0% 123,368 22.6% -6.9% All
brands (*) 58.5 55.4% 79.2 60.5%
-26.1% 327,056 74.0% 423,081
77.4% -22.7%
Total
105.6 100.0% 130.9 100.0% -19.3%
441,887 100.0% 546,449 100.0%
-19.1%
(*) Italsofa, Natuzzi
Editions, Editions and unbranded
Natuzzi S.p.A. and
Subsidiaries Unaudited Consolidated Profit
& Loss for the quarter ended on June 30, 2011 on the basis of
Italian GAAP (expressed in millions Euro except for share data)
Six months ended on Change
Percent of Sales June 30, 2011
June 30, 2010 % June 30, 2011
June 30, 2010 Upholstery net sales 211.0 242.2
-12.9% 87.0% 89.1% Other sales 31.4 29.5 6.4%
13.0% 10.9%
Total Net Sales
242.4 271.7 -10.8%
100.0% 100.0% Consumption (*) (103.2)
(112.1) -7.9% -42.6% -41.3% Labor (40.1) (40.2) -0.2% -16.5% -14.8%
Industrial Costs (15.8) (16.1) -1.9% -6.5% -5.9% of which
Depreciation, Amortization (5.0) (6.0)
Cost of Sales
(159.1) (168.4) -5.5%
-65.6% -62.0%
Industrial
Margin 83.3 103.3
-19.4% 34.4% 38.0%
Selling Expenses Transportation (22.0) (25.1) 9.1% 9.2%
Commissions (4.2) (5.7) 1.7% 2.1% Advertising (10.8) (12.7) 4.5%
4.7%
Other Selling and G&A (54.4) (57.1) 22.4%
21.0% of which Depreciation, Amortization (5.1) (6.2)
EBITDA 2.0 14.9
0.8% 5.5%
EBIT
(8.1) 2.7 -3.3%
1.0% Interest Income/(Costs), Net (0.3) (0.7)
Foreign Exchange, Net (0.2) 2.1 Other Income/(Cost), Net 17.4 (2.3)
Earning before Income Taxes 8.8
1.8 3.6%
0.7% Current taxes (1.2) (5.8) -0.5% -2.1%
Net result 7.6 (4.0)
3.1% -1.5%
Minority interest (1.0) (0.1)
Net Group Result
6.6 (4.1)
2.7% -1.5%
Net Group Result per
Share 0.12 (0.07)
Key Figures in
U.S. dollars Six months ended on Change
Percent of Sales (millions)
June 30, 2011
June 30, 2010 % June 30,
2011 June 30, 2010 Total Net Sales
340.5 381.7
-10.8% 100.0% 100.0%
Industrial Profit 117.0 145.1
-19.4%
34.4% 38.0% EBIT (11.4) 3.8
-400.0% -3.3% 1.0% Net Group Result
9.3 (5.8)
261.0% 2.7% -1.5% Net
Group Result per Share 0.2 (0.1)
Average
exchange rate (U.S.$ per €) 1.4047
(*)
Purchases plus beginning stock minus final stock and leather
processing
UPHOLSTERY NET SALES BREAKDOWN
Geographic breakdown Net
sales million euro Net sales seats
Six months ended on Six months ended on
June 30, 2011 June 30, 2010
Change % June 30, 2011 June 30, 2010
Change % Americas 63.7 30.2%
84.9 35.1% -25.0% 353,023 40.7%
457,123 45.1% -22.8% Natuzzi 8.0 3.8% 7.6 3.1%
5.3% 24,370 2.8% 19,781 2.0% 23.2% All brands (*) 55.7 26.4% 77.3
31.9% -27.9% 328,653 37.9% 437,342 43.2% -24.9%
Europe 90.4 42.8% 99.7 41.2%
-9.3% 319,644 36.9% 360,810
35.6% -11.4% Natuzzi 47.8 22.7% 51.1 21.1% -6.5%
104,847 12.1% 113,986 11.3% -8.0% All brands (*) 42.6 20.1% 48.6
20.1% -12.3% 214,797 24.8% 246,824 24.4% -13.0%
Italy
(Natuzzi) 26.7 12.7% 28.7 11.8%
-7.0% 82,007 9.5% 86,956 8.6%
-5.7% Rest of the world 30.2
14.3% 28.9 11.9% 4.5% 112,398
13.0% 107,873 10.7% 4.2% Natuzzi 17.2
8.2% 16.7 6.9% 3.0% 41,156 4.7% 39,183 8.6%
5.0% All brands
(*) 13.0 6.1% 12.2 5.0% 6.6% 71,242 8.2% 68,690 6.8% 3.7%
Total 211.0 100.0% 242.2
100.0% -12.9% 867,072 100.0%
1,012,762 100.0% -14.4%
Brands breakdown Net sales million euro Net
sales seats
Six months ended on
Six months ended on
June 30, 2011 June 30, 2010 Change %
June 30, 2011 June 30, 2010 Change %
Natuzzi 99.7 47.3% 104.1 43.0%
-4.2% 252,380 29.1% 259,906
25.7% -2.9% All brands (*) 111.3
52.7% 138.1 57.0% -19.4% 614,692
70.9% 752,856 74.3% -18.4%
Total 211.0 100.0% 242.2
100.0% -12.9% 867,072 100.0%
1,012,762 100.0% -14.4%
(*) Italsofa, Natuzzi Editions, Editions and unbranded
Natuzzi S.p.A. and Subsidiaries Unaudited
Consolidated Balance Sheets at June 30, 2011 on the basis of
Italian GAAP (Expressed in millions of euro)
ASSETS 30-Jun-11 31-Dec-10
Current assets: Cash and cash equivalents 76.0 61.1
Marketable debt securities 0.0 Trade receivables, net 87.7 95.8
Other receivables 57.6 51.7 Inventories 94.4 87.4 Unrealized
foreign exchange gains 0.7 0.2 Prepaid expenses and accrued income
1.9 1.3 Deferred income taxes 1.6 1.1
Total current assets 319.9
298.6 Non current assets: Net property, plant
and equipment 171.6 196 Other assets 6.5 9.3
Total non current assets 178.1
205.3 TOTAL ASSETS 498.0
503.9 LIABILITIES AND SHAREHOLDERS'
EQUITY Current
liabilities: Short-term borrowings 0 0.1 Current portion of
long-term debt 2.9 2.6 Accounts payable-trade 66.2 64.3 Accounts
payable-other 25.9 27.9 Unrealized foreign exchange losses 0.1 1.1
Income taxes 1.2 2.9 Salaries, wages and related liabilities 9.8
9.9
Total current
liabilities 106.1 108.8
Long-term liabilities: Employees' leaving entitlement 27.7
28.4 Long-term debt 11.5 12.8 Deferred income for capital grants
10.1 10.4 Other liabilities 15.3 18.2
Total long-term liabilities 64.6
69.8 Minority
interest 3.0 2.1
Shareholders' equity: Share capital 54.9 54.9 Reserves 12.0
12.0 Additional paid-in capital 9.3 9.3 Retained earnings 248.1
247.0
Total shareholders'
equity 324.3 323.2 TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY 498.0
503.9 Natuzzi S.p.A. and Subsidiaries
Consolidated Statements of Cash Flows (Expressed in
million of euro)
June 30, 2011 Dec 31, 2010
Cash flows from operating activities: Net earnings
(loss) 6.6 (11.1) Adjustments to
reconcile net income to net cash provided by operating
activities: Depreciation and amortization 10.1 23.4 Employees'
leaving entitlement 2.7 (1.2) Deferred income taxes (0.5) (0.4)
Minority interest 1.0 0.1 (Gain) loss on disposal of assets (20.7)
0.6 Unrealized foreign exchange losses and gains (1.5) 0.8
Impairment of long lived assets Deferred income for capital grants
(0.3) (0.7)
Non monetary operating costs (9.2)
22.6 Change in assets and liabilities:
Receivables, net 8.1 1.2 Inventories (7.1) (5.8) Prepaid expenses
and accrued income (0.5) 0.1 Other assets (5.9) 2.8 Accounts
payable 1.9 (2.2) Income taxes (1.8) (0.7) Salaries, wages and
related liabilities (0.1) (5.1) Other liabilities (7.6) (0.2)
Net working capital (13.0) (9.9)
Net cash provided by operating activities
(15.6) 1.6 Cash flows from investing
activities: Property, plant and equipment: Additions (11.9)
(17.9) Disposals 0.1 0.2 Proceeds from sales 45.0 Marketable debt
securities: -
Net cash used in investing activities
33.2 (17.7) Cash flows from
financing activities: Long-term debt: Proceeds 9.8
Repayments (1.0) (1.3) Short-term borrowings (0.1) (0.7) Capital
injection - - Dividends paid to minority interests - -
Net cash used in financing activities (1.1)
7.8 Effect of translation adjustments on cash
(1.6) 3.1
Increase (decrease) in cash and cash
equivalents 14.9 (5.2) Cash and cash
equivalents, beginning of the year 61.1
66.3 Cash and cash equivalents, end of the
year 76.0 61.1
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