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Interim Results AnnouncementItaltile Limited reported acceptable results for the six months ended 31 December 2007 this week. An industry wide downturn in demand during the traditionally heightened trading months of November and December 2007 dampened the group's performance. These results were obtained in a market where trading from stores in exclusively black residential areas was buoyed by high volume and the premium end of the market remained strong. Spending from middle income earners in the group's traditional stores has come under some pressure. The group reported a 7% increase in system wide turnover to R1,411 billion (2006: R1,324 billion), showing 6% real growth from its existing store network. Italtile's ongoing focus on efficiencies is also reflected in the increase of 12% to R208 million in the trading profit (2006: R185 million). Inventory that were purchased in anticipation of the traditional peak trading period which failed to materialise, increased by R98 million to R322 million over the comparable period. However, the group is confident that these inventories, many of which were acquired at more favourable exchange rates, are highly marketable and reflect consumers' current preferences. Italtile also embarked on several initiatives to consolidate its dominant position in the South African market. Gian-Paolo Ravazzotti, Chief Executive Officer of the Italtile Group stated: "In recent years the group made substantial investments to upgrade and relocate stores, resulting in significantly expanded average trading areas. We did this to meet customers' more sophisticated service demands, and we are now in the process of formalising and enhancing back office and retail floor structures as well as training the group's future leaders". The Africa operations continue to trade, albeit at a marginal level due to regional unrest. Progress was also made with the Australian operations which remain profitable. As announced on 9 January 2008, the finalisation of section 38 (2A) of the Companies Act which came into effect on 14 December 2007 enabled the BEE transaction announced in July 2007 to be completed. Messrs Giuseppe Zannoni and Gary Morolo were appointed to the board and Mr John Couzis resigned as a non-executive director of Italtile Limited. While projections in the current environment are difficult, the Board anticipates a lower rate of revenue growth for the full year as well as expecting demand to continue slowing as a result of the present uncertainty in the South African economy. Ravazzotti concludes: "Despite the uncertainty of the market, the business is robust - we have a conservative stance to our property investments and the initiatives to consolidate our position in the market including our strong local supplier relationships positions us well to 'weather the storm'." The group completed a 44:1 share split in October 2007, which has resulted in improved liquidity of the stock. The dividend cover was increased to 4 times, due to the prevailing uncertainty in the operating environment. The Board has declared an interim dividend of 4 cents per share (2006: 5,2 cents), a decrease of 23%. For further information contact:
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