ITALTILE ANNOUNCES INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2025
HIGHLIGHTS
Lance Foxcroft, CEO of Italtile, said, "In the first six months of our 2026 financial year, the Group faced a persistent low GDP growth environment, continued intense competition, and constrained consumers coping with escalating municipal costs and debt. Consumers continued to be highly price sensitive, prioritising value and focusing on necessities, while delaying discretionary spend on home renovations. Excess capacity and production in neighbouring countries continued to result in overstocking, depressed pricing and dumping in South Africa. Unreliable energy transmission and distribution infrastructure, which has resulted in numerous power interruptions, has caused damage to our equipment and reduced productivity and yield."
He emphasised that results for the first half of the previous financial year were buoyed by increased spending following the release of cash from the two-pot pension fund reforms, which did not recur to an appreciable extent in the review period.
Foxcroft added, "Italtile's retail stores maintained focus on increasing market share and prioritised exceptional personalised sales experience through building a robust selling organisation and curating exceptional ranges of desirable, great value products and development of its people. Our strategic price points, sales promotion activities and marketing campaigns were centred on ensuring the brand was top of mind, to drive growth of our share amid aggressive competition in this cash-constrained sector. Like-for-like operating costs increased only 3,5% and inventory reduced by 6,7% after working capital improvements."
Italtile Retail performed well with improved sales volumes and a growth in market share. Improved performance in the Projects division was boosted by its appointment as the predominant tile supplier to the Club Med project in KwaZulu‑Natal.
CTM endured a disappointing trading period, with sales volumes down 3% as competition, oversupply of tiles in the market, and constrained consumer discretionary spending put pressure on margins and profitability.
Italtile was disappointed with TopT's failure to gain additional market share as independent retailers opened more stores and informal traders continued to offer cheap products. TopT's revenue is highly sensitive to consumers' disposable income as seen in sales during December, after bonuses were paid. TopT opened one new store as it increased its footprint to offer convenience with positioning closer to its customers.
Ceramic Industries' regional trading conditions remained extremely difficult as disappointing performance in the retail segment and poor sales resulted in capacity utilisation of 77%. Cost reductions were not sufficient to offset the decline in profitability.
Foxcroft said, "our drive to increase sales, improve efficiencies and yields, and reduce costs continues. Ceramic Industries' exports declined given aggressive competition and protectionist strategies intended to restrict market access in certain SADC countries. Our ambition at Ceramic Industries is to increase sales through product development and sales channels while decreasing costs through improved efficiencies. Declining tile sales volumes had been disappointing."
Foxcroft said that investment in technology continued in order to differentiate and set fashion trends. Kilimanjaro Edge range of rectified products has been launched after the upgrade at Vitro, with two additional formats to be added in the second half of the financial year. Gryphon has sold the first technical porcelain tiles produced in the region and these exceptionally strong tiles have been well received in construction projects. Gryphon tile plant anticipates commissioning the polishing line in March 2026, adding another category of products to Ceramic Industries' range.
He added, "we also aim to manufacture products in a similar format and properties to those previously produced by Johnson Tiles to provide customers with a suitable alternative to these discontinued products."
Ceramic Australia experienced softer production and sales volumes which impacted profitability. Operating conditions remained testing as import pressure persisted. The new rectification line has been commissioned, and increased sales and a review of costs will be the focus for the second half of the financial year.
Ezee Tile's revamped Durban factory has improved supply to KwaZulu-Natal. Building of the new Mokopane factory, that will position Ezee Tile to grow sales and improve market share in the Limpopo region, will start early in 2026. Launching products for the construction market remains a priority. Ezee Tile is recognized as a quality producer of adhesives, grouts and specialist construction products. It will focus on growing market share in South Africa and improving operations and sales in Kenya and Zimbabwe where prospects are good.
Foxcroft gave an update on gas supply, saying "while the immediate threat to natural gas supply has been delayed to June 2028, we will continue to monitor developments in the supply and pricing of piped natural gas, liquid natural gas, trucked natural gas, methane rich gas, biogas and synthetic gas from coal to assess options for affordable gas supply. We await pricing from Sasol on methane rich gas and will subsequently evaluate the timing of and necessity for our coal-fired hot air generator project."
Turning to the short-term future, Foxcroft noted that the economic outlook for South Africa for the first half of 2026 is cautiously optimistic after sustained reduced inflation and a lower interest rate. He said, "we hope that these positive factors will reinvigorate building and construction and that home renovations will increase as lower borrowing costs make projects more feasible."
He emphasised that the priority is growth through increased market share and customer satisfaction, saying "we will continue to focus on the growth levers within our control to realise the opportunities within our business. We will do this by improving our competitiveness at all touchpoints, namely our iconic brands, leading-edge technology and products, vertically integrated supply chain, and resilient, capable teams and franchise partners. Ceramic Industries will focus on
delighting customers with fashionable product while driving efficiencies to reduce costs and remain competitive."
