The Board of Directors of Natuzzi S.p.A. (NYSE:NTZ) (“Natuzzi” or the “Company”) has approved its consolidated financial results for the second quarter and first half of 2014.
After the meeting of the Board of Directors, the Chief Executive Officer, Pasquale Natuzzi, commented:
“First semester results deliver two important messages about the progress of the 2014-2016 Transformation Plan: they confirm the validity of our overall marketing and distribution strategy, while highlighting the need to implement certain corrective measures within the Group’s industrial operations which may result in slower implementation of the Plan than originally envisaged.
Notwithstanding encouraging high single-digit growth in year-to-date order flow, the performance of our industrial plants has fallen short of our expectations. Production delays in China and inefficiencies at the Italian plants – together with unfavorable currency movements that have affected our sales by 3.3% - have contributed to a decline in the Company’s turnover to €211.1 million, a decrease of 6.1% compared to the first six months of 2013.
At the same time, we highlight a significant recovery in our sales during the second quarter of 2014. In fact, on a quarterly basis, second quarter turnover was down 1.2% (or up 1.7% at constant exchange rates), a 10% improvement from the 11.2% reduction reported in the first quarter of the year.
All of the above has negatively affected our industrial margin, which declined to 27.1% in the first half of 2014 compared to 29.2% in the first half of 2013.
The strengthening of the Euro against the US dollar, which led to a €1.6 million decline in first half operating results, and the increase in the cost of leather, which led to a €4 million increase in the cost of goods sold, also contributed to an operating loss of €20.4 million for the first half of 2014 (compared to an operating loss of €14.3 million for the first half of 2013). In this regard, we expect the recent weakening of the Euro against the US dollar and the increase in our price list since May to offset the increase in leather cost in the following quarters.
The execution of the other restructuring projects included in the 2014-2016 Transformation Plan is continuing on schedule, and we are further strengthening the Group’s management team, including through two recent appointments within our commercial operations (Americas and Western Europe), and three new managers responsible for HR and Organization, Italian Operations and Quality, respectively.
In light of encouraging order flow, continuing improvements in our operations and the on-time execution of the other projects in the Transformation Plan, I believe we can confirm the long-term goals as reflected in the Plan.
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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, 2013. Natuzzi undertakes no obligation to update any of the forward-looking statements after the date of this press release.
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About Natuzzi S.p.A.
Founded in 1959 by Pasquale Natuzzi, Natuzzi S.p.A. designs, manufactures and sells a broad collection of couches, armchairs, home furniture and home accessories. With consolidated revenues of €449.1 million in 2013, Natuzzi is Italy’s largest furniture house and the player with the greatest global reach in its sector, with eight manufacturing plants, twelve commercial offices and more than 1,200 points of sale worldwide. Ethics and social responsibility, innovation, industrial know-how and integrated management of its value chain represent the points of strength that have made the Natuzzi Group a market leader and established Natuzzi as the most recognized furniture brand in the world among consumers of luxury goods. Natuzzi S.p.A. has been listed on the New York Stock Exchange since May 1993. The Company is ISO 9001 and 14001 certified.
| Natuzzi S.p.A. and Subsidiaries | ||||||||||||
| Unaudited Consolidated Profit & Loss for the second quarter of 2014 & 2013 on the basis of Italian GAAP | ||||||||||||
| (expressed in millions Euro, except per share amounts) | ||||||||||||
| Three months ended on | Change | Percentage of Sales | ||||||||||
| 30-Jun-14 | 30-Jun-13 | % | 30-Jun-14 | 30-Jun-13 | ||||||||
| Upholstery net sales | 100.3 | 102.7 | -2.4% | 89.0% | 90.1% | |||||||
| Other sales | 12.4 | 11.3 | 9.2% | 11.0% | 9.9% | |||||||
| Total Net Sales | 112.7 | 114.1 | -1.2% | 100.0% | 100.0% | |||||||
| Consumption (*) | (52.0) | (53.7) | -3.1% | -46.2% | -47.1% | |||||||
| Labor | (24.9) | (20.3) | 22.8% | -22.1% | -17.8% | |||||||
| Industrial Costs | (6.6) | (6.6) | 1.3% | -5.9% | -5.8% | |||||||
| of which: Depreciation, Amortization | (2.0) | (2.3) | -12.6% | -1.8% | -2.0% | |||||||
| Cost of Sales | (83.6) | (80.5) | 3.8% | -74.2% | -70.6% | |||||||
| Industrial Margin | 29.1 | 33.5 | -13.2% | 25.8% | 29.4% | |||||||
| Selling Expenses | (16.6) | (16.1) | 2.8% | -14.7% | -14.1% | |||||||
| Transportation | (11.0) | (11.4) | -3.7% | -9.8% | -10.0% | |||||||
| Commissions | (2.2) | (2.3) | -6.4% | -1.9% | -2.0% | |||||||
| Advertising | (3.4) | (2.4) | 43.4% | -3.0% | -2.1% | |||||||
| Other Selling and G&A | (23.5) | (24.8) | -5.1% | -20.9% | -21.7% | |||||||
| of which: Depreciation, Amortization | (0.9) | (1.8) | -49.1% | -0.8% | -1.6% | |||||||
| EBITDA | (8.0) | (3.3) | -7.1% | -2.9% | ||||||||
| EBIT | (11.0) | (7.4) | -9.7% | -6.5% | ||||||||
| Interest Income/(Costs), Net | (0.2) | (0.1) | ||||||||||
| Foreign Exchange, Net | 0.3 | (2.7) | ||||||||||
| Other Income/(Cost), Net | (3.6) | (1.8) | ||||||||||
| Earning before Income Taxes | (14.5) | (11.9) | -12.8% | -10.5% | ||||||||
| Current taxes | (0.3) | (2.1) | -0.3% | -1.8% | ||||||||
| Net Result | (14.8) | (14.0) | -13.1% | -12.3% | ||||||||
| Minority interest | (0.0) | (0.2) | ||||||||||
| Net Group Result | (14.8) | (14.2) | -13.1% | -12.4% | ||||||||
| Net Group Result per Share | (0.27) | (0.26) | ||||||||||
| Key Figures in U.S. dollars | Three months ended on | Change | Percentage of Sales | |||||||||
| (millions) | 30-Jun-14 | 30-Jun-13 | % | 30-Jun-14 | 30-Jun-13 | |||||||
| Total Net Sales | 154.5 | 156.4 | -1.2% | 100.0% | 100.0% | |||||||
| Industrial Margin | 39.9 | 46.0 | -13.2% | 25.8% | 29.4% | |||||||
| EBIT | (15.1) | (10.1) | -9.7% | -6.5% | ||||||||
| Net Group Result | (20.2) | (19.5) | -13.1% | -12.4% | ||||||||
| Net Group Result per Share | (0.37) | (0.35) | ||||||||||
| Average exchange rate (U.S.$ per 1€) | 1.3715 | |||||||||||
| (*) Purchases plus beginning stock minus final stock and leather processing | ||||||||||||
| UPHOLSTERY NET SALES BREAKDOWN | ||||||||||||||||||||||
| GEOGRAPHIC BREAKDOWN | ||||||||||||||||||||||
| NET SALES (in €, million) | NET SALES (in seats sold) | |||||||||||||||||||||
| Three months ended on | Three months ended on | |||||||||||||||||||||
| AREA | 30-Jun-14 | % | 30-Jun-13 | % | delta | 30-Jun-14 | % | 30-Jun-13 | % | delta | ||||||||||||
| Americas | 39.7 | 39.6% | 44.7 | 43.5% | -11.1% | 196,369 | 48.1% | 221,111 | 51.1% | -11.2% | ||||||||||||
| Natuzzi | 24.9 | 24.8% | 27.6 | 26.9% | -9.9% | 97,814 | 24.0% | 119,074 | 27.5% | -17.9% | ||||||||||||
| Private label | 14.9 | 14.8% | 17.1 | 16.6% | -13.0% | 98,555 | 24.1% | 102,037 | 23.6% | -3.4% | ||||||||||||
| EMEA | 48.3 | 48.2% | 45.8 | 44.6% | 5.4% | 168,780 | 41.3% | 166,543 | 38.5% | 1.3% | ||||||||||||
| Natuzzi | 38.5 | 38.4% | 36.5 | 35.6% | 5.4% | 105,668 | 25.9% | 109,359 | 25.3% | -3.4% | ||||||||||||
| Private label | 9.8 | 9.8% | 9.3 | 9.1% | 5.4% | 63,113 | 15.5% | 57,185 | 13.2% | 10.4% | ||||||||||||
| Asia-Pacific | 12.3 | 12.2% | 12.2 | 11.9% | 0.5% | 43,213 | 10.6% | 45,143 | 10.4% | -4.3% | ||||||||||||
| Natuzzi | 11.7 | 11.6% | 10.8 | 10.5% | 8.0% | 38,535 | 9.4% | 35,356 | 8.2% | 9.0% | ||||||||||||
| Private label | 0.6 | 0.6% | 1.4 | 1.4% | -57.0% | 4,678 | 1.1% | 9,787 | 2.3% | -52.2% | ||||||||||||
| TOTAL | 100.3 | 100.0% | 102.7 | 100.0% | -2.4% | 408,361 | 100.0% | 432,796 | 100.0% | -5.6% | ||||||||||||
| BREAKDOWN BY BRAND | ||||||||||||||||||||||
| NET SALES (in €, million) | NET SALES (in seats sold) | |||||||||||||||||||||
| Three months ended on | Three months ended on | |||||||||||||||||||||
| BRAND | 30-Jun-14 | % | 30-Jun-13 | % | delta | 30-Jun-14 | % | 30-Jun-13 | % | delta | ||||||||||||
| Natuzzi | 75.0 | 74.8% | 74.9 | 72.9% | 0.1% | 242,016 | 59.3% | 263,788 | 60.9% | -8.3% | ||||||||||||
| Private label | 25.3 | 25.2% | 27.8 | 27.1% | -9.1% | 166,345 | 40.7% | 169,009 | 39.1% | -1.6% | ||||||||||||
| TOTAL | 100.3 | 100.0% | 102.7 | 100.0% | -2.4% | 408,361 | 100.0% | 432,796 | 100.0% | -5.6% | ||||||||||||
| "Natuzzi" includes the Group's three lines of product: Natuzzi Italia, Natuzzi Editions and Natuzi Re-Vive | ||||||||||||||||||||||
| Natuzzi S.p.A. and Subsidiaries | ||||||||||||
| Unaudited Consolidated Profit & Loss for the first half 2014 & 2013 on the basis of Italian GAAP | ||||||||||||
| (expressed in millions Euro, except per share amounts) | ||||||||||||
| Six months ended on | Change | Percentage of Sales | ||||||||||
| 30-Jun-14 | 30-Jun-13 | % | 30-Jun-14 | 30-Jun-13 | ||||||||
| Upholstery net sales | 188.2 | 201.7 | -6.7% | 89.2% | 89.7% | |||||||
| Other sales | 22.9 | 23.1 | -1.0% | 10.8% | 10.3% | |||||||
| Total Net Sales | 211.1 | 224.8 | -6.1% | 100.0% | 100.0% | |||||||
| Consumption (*) | (96.5) | (104.0) | -7.2% | -45.7% | -46.3% | |||||||
| Labor | (44.0) | (41.3) | 6.4% | -20.8% | -18.4% | |||||||
| Industrial Costs | (13.4) | (13.8) | -2.9% | -6.4% | -6.1% | |||||||
| of which: Depreciation, Amortization | (4.5) | (4.7) | -3.5% | -2.1% | -2.1% | |||||||
| Cost of Sales | (153.9) | (159.2) | -3.3% | -72.9% | -70.8% | |||||||
| Industrial Margin | 57.1 | 65.6 | -13.0% | 27.1% | 29.2% | |||||||
| Selling Expenses | (32.5) | (33.3) | -2.2% | -15.4% | -14.8% | |||||||
| Transportation | (21.2) | (22.7) | -6.3% | -10.1% | -10.1% | |||||||
| Commissions | (4.4) | (4.8) | -6.7% | -2.1% | -2.1% | |||||||
| Advertising | (6.9) | (5.8) | 17.5% | -3.2% | -2.6% | |||||||
| Other Selling and G&A | (45.0) | (46.6) | -3.5% | -21.3% | -20.7% | |||||||
| of which: Depreciation, Amortization | (2.0) | (3.4) | -40.6% | -0.9% | -1.5% | |||||||
| EBITDA | (13.9) | (6.2) | -6.6% | -2.8% | ||||||||
| EBIT | (20.4) | (14.3) | -9.7% | -6.3% | ||||||||
| Interest Income/(Costs), Net | (0.5) | (0.2) | ||||||||||
| Foreign Exchange, Net | 1.1 | (1.2) | ||||||||||
| Other Income/(Cost), Net | (3.9) | (1.3) | ||||||||||
| Earning before Income Taxes | (23.7) | (16.9) | -11.2% | -7.5% | ||||||||
| Current taxes | (0.8) | (3.1) | -0.4% | -1.4% | ||||||||
| Net Result | (24.5) | (20.0) | -11.6% | -8.9% | ||||||||
| Minority interest | (0.0) | (0.2) | ||||||||||
| Net Group Result | (24.5) | (20.2) | -11.6% | -9.0% | ||||||||
| Net Group Result per Share | (0.45) | (0.37) | ||||||||||
| Key Figures in U.S. dollars | Six months ended on | Change | Percentage of Sales | |||||||||
| (millions) | 30-Jun-14 | 30-Jun-13 | % | 30-Jun-14 | 30-Jun-13 | |||||||
| Total Net Sales | 289.3 | 308.2 | -6.1% | 100.0% | 100.0% | |||||||
| Industrial Margin | 78.3 | 90.0 | -13.0% | 27.1% | 29.2% | |||||||
| EBIT | (28.0) | (19.6) | -9.7% | -6.3% | ||||||||
| Net Group Result | (33.6) | (27.7) | -11.6% | -9.0% | ||||||||
| Net Group Result per Share | (0.61) | (0.50) | ||||||||||
| Average exchange rate (U.S.$ per 1€) | 1.3709 | |||||||||||
| (*) Purchases plus beginning stock minus final stock and leather processing | ||||||||||||
| UPHOLSTERY NET SALES BREAKDOWN | ||||||||||||||||||||||
| GEOGRAPHIC BREAKDOWN | ||||||||||||||||||||||
| NET SALES (in €, million) | NET SALES (in seats sold) | |||||||||||||||||||||
| Six months ended on | Six months ended on | |||||||||||||||||||||
| AREA | 30-Jun-14 | % | 30-Jun-13 | % | delta | 30-Jun-14 | % | 30-Jun-13 | % | delta | ||||||||||||
| Americas | 73.0 | 38.8% | 84.5 | 41.9% | -13.6% | 368,559 | 47.2% | 415,814 | 49.1% | -11.4% | ||||||||||||
| Natuzzi | 43.1 | 22.9% | 52.4 | 26.0% | -17.8% | 173,501 | 22.2% | 222,542 | 26.3% | -22.0% | ||||||||||||
| Private label | 29.9 | 15.9% | 32.1 | 15.9% | -6.7% | 195,058 | 25.0% | 193,272 | 22.8% | 0.9% | ||||||||||||
| EMEA | 92.6 | 49.2% | 95.2 | 47.2% | -2.7% | 330,599 | 42.3% | 352,382 | 41.6% | -6.2% | ||||||||||||
| Natuzzi | 73.9 | 39.3% | 74.2 | 36.8% | -0.3% | 211,892 | 27.1% | 223,866 | 26.5% | -5.3% | ||||||||||||
| Private label | 18.7 | 9.9% | 21.0 | 10.4% | -11.2% | 118,707 | 15.2% | 128,516 | 15.2% | -7.6% | ||||||||||||
| Asia-Pacific | 22.6 | 12.0% | 22.1 | 10.9% | 2.5% | 81,530 | 10.4% | 78,023 | 9.2% | 4.5% | ||||||||||||
| Natuzzi | 21.3 | 11.3% | 19.9 | 9.9% | 7.1% | 71,793 | 9.2% | 62,678 | 7.4% | 14.5% | ||||||||||||
| Private label | 1.3 | 0.7% | 2.2 | 1.1% | -40.0% | 9,737 | 1.2% | 15,346 | 1.8% | -36.5% | ||||||||||||
| TOTAL | 188.2 | 100.0% | 201.7 | 100.0% | -6.7% | 780,688 | 100.0% | 846,219 | 100.0% | -7.7% | ||||||||||||
| BREAKDOWN BY BRAND | ||||||||||||||||||||||
| NET SALES (in €, million) | NET SALES (in seats sold) | |||||||||||||||||||||
| Six months ended on | Six months ended on | |||||||||||||||||||||
| BRAND | 30-Jun-14 | % | 30-Jun-13 | % | delta | 30-Jun-14 | % | 30-Jun-13 | % | delta | ||||||||||||
| Natuzzi | 138.3 | 73.5% | 146.5 | 72.6% | -5.6% | 457,186 | 58.6% | 509,085 | 60.2% | -10.2% | ||||||||||||
| Private label | 49.9 | 26.5% | 55.2 | 27.4% | -9.7% | 323,502 | 41.4% | 337,134 | 39.8% | -4.0% | ||||||||||||
| TOTAL | 188.2 | 100.0% | 201.7 | 100.0% | -6.7% | 780,688 | 100.0% | 846,219 | 100.0% | -7.7% | ||||||||||||
| "Natuzzi" includes the Group's three lines of product: Natuzzi Italia, Natuzzi Editions and Natuzi Re-Vive | ||||||||||||||||||||||
| Natuzzi S.p.A. and Subsidiaries | ||||
| Unaudited Consolidated Balance Sheets on the basis of Italian GAAP | ||||
| (Expressed in millions of Euro) | ||||
| ASSETS | 30-Jun-14 | 31-Dec-13 | ||
| Current assets: | ||||
| Cash and cash equivalents | 41.9 | 61.0 | ||
| Marketable debt securities | 0.0 | 0.0 | ||
| Trade receivables, net | 82.6 | 78.9 | ||
| Other receivables | 35.3 | 48.5 | ||
| Inventories | 85.1 | 79.0 | ||
| Unrealized foreign exchange gains | 0.2 | 0.6 | ||
| Prepaid expenses and accrued income | 1.9 | 1.9 | ||
| Deferred income taxes | 0.3 | 0.3 | ||
| Total current assets | 247.4 | 270.2 | ||
| Non-current assets: | ||||
| Net property, plant and equipment | 140.6 | 143.6 | ||
| Other assets | 8.1 | 8.1 | ||
| Total non-current assets | 148.7 | 151.7 | ||
| TOTAL ASSETS | 396.1 | 421.9 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| Current liabilities: | ||||
| Short-term borrowings | 21.1 | 25.0 | ||
| Current portion of long-term debt | 3.4 | 3.3 | ||
| Accounts payable-trade | 72.0 | 67.4 | ||
| Accounts payable-other | 23.2 | 25.8 | ||
| Unrealized foreign exchange losses | 0.9 | 0.2 | ||
| Income taxes | 1.3 | 7.1 | ||
| Deferred income taxes | 1.0 | 1.0 | ||
| Salaries, wages and related liabilities | 17.8 | 8.3 | ||
| Total current liabilities | 140.6 | 138.2 | ||
| Long-term liabilities: | ||||
| Employees' leaving entitlement | 24.9 | 24.8 | ||
| Long-term debt | 2.2 | 4.2 | ||
| Deferred income taxes | - | - | ||
| Deferred income for capital grants | 8.4 | 8.6 | ||
| Other liabilities | 33.7 | 34.4 | ||
| Total long-term liabilities | 69.2 | 72.1 | ||
| Minority interest | 2.7 | 2.7 | ||
| Shareholders' equity: | ||||
| Share capital | 54.9 | 54.9 | ||
| Reserves | 42.8 | 42.8 | ||
| Additional paid-in capital | 8.4 | 8.4 | ||
| Retained earnings | 77.5 | 102.8 | ||
| Total shareholders' equity | 183.6 | 208.9 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 396.1 | 421.9 | ||
| Natuzzi S.p.A. and Subsidiaries | ||||
| Consolidated Statements of Cash Flows | Six months ended on | |||
| (Expressed in million of Euro) | 30-Jun-14 | 30-Jun-13 | ||
| Cash flows from operating activities: | ||||
| Net earnings (loss) | (24.5) | (20.2) | ||
| Adjustments to reconcile net income to net cash | ||||
| provided by operating activities: | ||||
| Depreciation and amortization | 6.5 | 8.0 | ||
| Impairment of long lived assets | 2.2 | - | ||
| Deferred income taxes | (0.1) | (0.2) | ||
| Minority interest | 0.0 | 0.2 | ||
| (Gain) loss on disposal of assets | (0.0) | 0.2 | ||
| Unrealized foreign exchange losses (gains) | 1.1 | 0.5 | ||
| Extraordinary items, net | 1.0 | 0.7 | ||
| Deferred income for capital grants | (0.2) | (0.2) | ||
| Non monetary operating items | 10.5 | 9.2 | ||
| Change in assets and liabilities: | ||||
| Receivables, net | (3.8) | 4.7 | ||
| Inventories | (6.1) | (2.2) | ||
| Prepaid expenses and accrued income | 0.0 | 0.4 | ||
| Accounts payable | 4.9 | (10.4) | ||
| Income taxes | (5.8) | 1.8 | ||
| Salaries, wages and related liabilities | 8.6 | 1.2 | ||
| Other assets/liabilities, net | 9.4 | 4.0 | ||
| Employees' leaving entitlement | - | - | ||
| Net working capital | 7.2 | (0.4) | ||
| Net cash generated/(used) by operating activities | (6.8) | (11.4) | ||
| Cash flows from investing/restructuring activities: | ||||
| Property, plant and equipment: | ||||
| Additions | (5.0) | (3.3) | ||
| Disposals | 0.1 | 0.0 | ||
| Goverment grants received | 0.5 | - | ||
| One time termination benefits | (1.1) | - | ||
| Lay-off/Rent penalty dos closure | (0.2) | - | ||
| Net cash generated/(used) by investing/restructuring activities | (5.7) | (3.2) | ||
| Cash flows from financing activities: | ||||
| Long-term debt: | ||||
| Proceeds | - | - | ||
| Repayments | (1.9) | (2.3) | ||
| Short-term borrowings | (4.0) | 5.0 | ||
| Dividends paid to minority interests | - | (0.2) | ||
| Net cash generated/(used) by financing activities | (5.9) | 2.5 | ||
| Effect of translation adjustments on cash | (0.7) | 1.5 | ||
| Increase (decrease) in cash and cash equivalents | (19.2) | (10.6) | ||
| Cash and cash equivalents, beginning of the year | 61.0 | 77.7 | ||
| Cash and cash equivalents, end of the period | 41.9 | 67.1 | ||
Contacts:
Piero Direnzo; tel.
+39.080.8820.812
pdirenzo@natuzzi.com
or
NATUZZI
CORPORATE COMMUNICATION
Vito Basile (Press Office); tel.
+39.080.8820.676
vbasile@natuzzi.com
