Natuzzi S.p.A. First Nine Months and Third Quarter 2013 Consolidated Financial Results

The Board of Directors of Natuzzi S.p.A. (NYSE:NTZ) (“Natuzzi” or “the Company”), a leading company in the furnishings industry, today approved its consolidated financial results for the first nine months and third quarter of 2013.

FIRST NINE MONTHS OF 2013

• Total Net Sales equal to €328.1 mln, compared to €342.3 mln in 2012;
• Total upholstery Net Sales equal to €294.2 mln, (+0.8% in terms of unit sold), according to the following brand and geographical breakdown:

• Industrial margin at 29.3%, versus 33.6% reported one year ago. The industrial margin was affected by a different sales-mix, higher price in raw materials and raising labour costs in China and Romania.
• Selling expenses decreased, passing from €53.9 mln in 2012 to €49.4 mln.
• The remaining Selling, General and Administrative expenses were down by €1.6 mln, at €69.8 mln.
• Negative EBIT of €23.1 mln (which includes a negative currency effect of €3.8 mln) compared to a negative EBIT of €10.3 mln in last year; negative EBITDA of €10.8 mln, versus a positive EBITDA of €2.6 mln in 2012;
• Extraordinary items totaling €15.0 mln, following a further accrual related to the restructuring Plan;
• Positive Net Financial Position as at September 30, 2013 at €27.0 mln; stable in the third quarter thanks to a positive cash flow from operation.

THIRD QUARTER 2013

• Total Nets Sales equal to €103.3 mln, versus €111.7 mln in 2012;
• Total Upholstery Net Sales equal to €92.5 mln, down by 2.1% in terms of seats sold, according to the following brand and geographical breakdown:

• The Industrial margin was equal to 29.6% of total net sales, versus a 35.3% margin reported one year ago. The performance was affected by the different sales-mix, rising labour cost in the Chinese and Romanian plants, increasing raw materials.
• Selling expenses decreased, from €19.1 mln in 2012 to €16.2 mln.
• The other Selling, General and Administrative expenses were equal to €23.2 mln and were affected by higher costs linked to the preparation of the Business Plan, as well as costs arising from the opening of new stores in Asia.
• Negative EBIT of €8.8 mln (which includes a negative currency effect of €2.4 mln), versus a negative EBIT of €2.3 mln of last year; negative EBITDA of €4.5 mln versus a positive EBITDA of €1.8 mln in 2012.

Comments by the CEO

After the Board of Directors, Pasquale Natuzzi, President and CEO, stated: “Group’s results are still affected by different factors that do not let us benefit from our huge efforts we have made in the creation of solid basis for the Group’s future.

New market opportunities have been identified, and, through the development of new Natuzzi Italia branded collections, we have captured the consumers’ needs in terms of price and style. Such collections were already available within all points of sales since September and are bringing positive results, especially in those Western Europe markets that are particularly hit by the current crisis in consumption.

In October, during the High Point furnishings market, one of the most important fair events in the USA, we officially launched our new armchair, Re-vive. It is a product with highly innovative contents, both in terms of design, style and materials used, as well as able to offer high performances in terms of comfort. Our intention is, through the introduction of Re-vive, to penetrate the strategic recliners market – which just in the United States is worth about 4 billion dollars - and then, create and become the leader of a new market segment: the “performance recliner”.

The success we obtained at the High Point market was confirmed also during the fairs held in November in Brussels and Paris, where Re-vive was given the “Throphée de l’Innovation 2013” prize.

I invite you to have a look at the video on the Natuzzi Group YouTube channel available at the following link: http://youtu.be/uyFB4dAK1lY

During the High Point market we also launched the new Natuzzi Italia, Natuzzi Editions and Private Label (Softaly) collections, which have been highly welcomed by the trade.

In October and November four new Natuzzi Italia stores were opened, among which the seventh Australian point of sales located in Sidney, the first in Cote d’Ivoire, located in Abidjian, another store in Vietnam (located in Hanoi, after the one opened in Ho Chi Min city), the second Asian Country with the highest growth rates after China.

Furthermore, we highlight the opening of the flagship Natuzzi Italia store in the center of Rome, after those opened in Milan and Como.

In Italy, during October, the new Divani & Divany by Natuzzi collection supported by a new advertising campaign has led to an increase in the order flow of +48.9% compared to the same month of 2012.

We highlight the Agreement signed on October the 10th together with the Italian Unions to start with the restructuring of the Italian operations.

The Italian industrial plan has already started, through gradual layoffs of redundant workers, the closure of an industrial plant located in Ginosa (Italy), and through the rationalization of activities within the remaining Italian plants. These measures are bringing the first positive results in terms of productivity.

We continue to invest in product and process innovation. The tests we carried out show us that the new industrial Moving Line approach will allow us to get important savings on COGS. All the models that have been introduced during the recent fairs were designed and developed according to the new industrial process.

We will concentrate our efforts during the last weeks of the year on the finalization of the five-year business plan that, starting form a new brand and distribution strategy, will put the Group in conditions to recover profitability.

We believe that – concluded Pasquale Natuzzi – we have taken the right decisions for the future of our Company and created the conditions for a turnaround starting from next year.”

The Company will host a conference call on Tuesday November 26th, 2013 at 10:00 a.m. U.S. Eastern Time (4.00 p.m. Italian time, or 3.00 p.m. UK time) to discuss third quarter and first nine months 2013 financial results.

The dial-in phone numbers for the live conference call will be 1-888-438-5519 (toll-free) for persons calling from the U.S. or Canada, and 1-719-325-2429 for those calling from other countries.

A live web cast of the conference call will be available on line at http://www.natuzzi.com/ under the “About Us/Investor Relations” section.

A replay of the call will be available shortly after the end of the conference call starting from November 26, 2013 (at 1:00 pm US Eastern time), to December 26, 2013. To access the replay of the conference call, interested persons need to dial 1-877-870-5176 (toll-free) for calls from U.S. and Canada, and 1-858-384-5517 for calls from other countries. The access code for the replay is: 1030971.

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 Natuzzi’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 Natuzzi’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 20-F for the year ended December 31, 2012. Natuzzi 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. designs and manufactures a broad collection of residential upholstered furniture. With consolidated revenues of EUR 468.8 million in 2012, Natuzzi is Italy's largest furniture manufacturer. The Natuzzi Group exports its innovative high-quality sofas and armchairs in five continents under separate brand names, Natuzzi Italia, Natuzzi Editions (only for the North American market)/Leather Editions and Softaly. 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.