 |
Italtile Delivers Creditable Results in Beleaguered MarketJohannesburg, 11 August 2009: Notwithstanding testing trading conditions, Italtile Ltd gained modest market share and delivered creditable results in line with expectations. The group reported a 7% decline in system wide turnover to R2.57bn (2008: R2.77bn), while trading profit decreased by 10% to R361m (2008: R399m). Price inflation was restricted to 2.5%. Prudent inventory management reduced stockholding by 27% to R191m over the reporting period, resulting in a strong balance sheet and improved product mix. Cash reserves increased by 137% to R667m, which favourably positions the group to capitalise on opportunities as they arise. Chief Executive Officer, GianPaolo Ravazzotti, says: "In the current economy the strength of our high profile brands stands us in good stead. Offered a wider range than ever in a competitive market, educated consumers turn to established brands they trust." "Despite reduced consumer traffic, the group benefited from an increase in average selling price," he comments. The group's Top T, CTM and Italtile brands are represented in 104 stores across Africa and Australia. The offering is positioned to appeal across the consumer spectrum from the value-driven volume end to the exclusive premium-end sector. During the review period, the high volume first time home buyers market proved robust, with black consumers particularly, driving growth. In-house brand building campaigns such as Kilimanjaro and Studio Ceramico also proved successful for CTM. The Italtile brand delivered improved turnover and succeeded in gaining market share. Range enhancement and improved service delivery benefited the business, whilst investment in Italtile's 40th anniversary campaign raised increased awareness of the brand. Management believes the brand formula is reaching a level where it can be rolled out to extend the current network of 7 stores. The group's fledgeling Top T operation comprises 8 stores serving rural towns and smaller informal markets. The good value, no-frills formula is well suited to price sensitive consumers. Further cautious expansion will be evaluated on an ongoing basis. Ravazzotti notes: "Across the brands, Management's priorities over the year have been skills development and improvement in systems and controls, which will enhance the customer's shopping experience." Long-standing relationships with strategic suppliers ensured consistency of product quality and supply and reduced exposure to import volatility. The group's supply chain was further optimised with the acquisition of an interest in Eezetile, a national manufacturer of adhesive, grout and related products. The Australian operation, which comprises nine stores, traded through an exceptionally difficult year. An improved performance in the final three months of the review period enabled the business to deliver a small trading profit. The group has 14 CTM stores in sub-equatorial Africa, where the strategy is to use existing relationships to entrench the brand's presence and further develop the territories. Opportunities are currently being evaluated in Malawi and Zambia where the Master Franchise licenses have expired. Ravazzotti concludes: "The trading environment will remain difficult over the next financial year. Our challenge will be to retain and grow market share and capitalise on opportunities as the economy recovers." The Board declared a final dividend of 5 cents (2008: 8 cents). For further information contact:
|
