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:
                               
Brand       2013       %
Natuzzi Italia       93.4       31.7%
Natuzzi Editions 117.4 39.9%
Private Label (Softaly)       83.4       28.4%
Total (€ mln)       294.2       100.0%
 
                               
Area       2013       %
Americas       116.8       39.7%
EMEA 135.3 46.0%
Asia Pacific 35.8 12.2%
Brasile       6.3       2.1%
Total (€ mln)       294.2       100.0%
 
  • 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:
                               
Brand       2013       %
Natuzzi Italia       28.9       31.3%
Natuzzi Editions 36.4 39.4%
Private Label (Softaly)       27.1       29.3%
Total (€ mln)       92.5       100.0%
 
                               
Area       2013       %
Americas       36.9       39.9%
EMEA 40.1 43.4%
Asia Pacific 13.8 14.9%
Brasile       1.7       1.8%
Total (€ mln)       92.5       100.0%
 
  • 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 10 th 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 26 th , 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.
   
Natuzzi S.p.A. and Subsidiaries
Unaudited Consolidated Profit & Loss for the nine months of 2013 & 2012 on the basis of Italian GAAP
(expressed in millions Euro)
                 
  Nine months ended on Change Percentage of Sales
    30-Sep-13 30-Sep-12   %   30-Sep-13 30-Sep-12
 
Upholstery net sales 294.2 298.9 -1.6% 89.7% 87.3%
Other sales   33.8 43.4   -22.1%   10.3% 12.7%
Total Net Sales   328.1 342.3   -4.2%   100.0% 100.0%
 
Consumption (*) (152.1) (150.8) 0.9% -46.3% -44.0%
Labor (58.8) (55.1) 6.8% -17.9% -16.1%
Industrial Costs (21.0) (21.5) -2.3% -6.4% -6.3%
of which: Depreciation, Amortization   (7.1) (7.0)   1.3%   -2.2% -2.1%
Cost of Sales   (231.8) (227.3)   2.0%   -70.7% -66.4%
                 
Industrial Margin   96.2 115.0   -16.3%   29.3% 33.6%
 
Selling Expenses (49.4) (53.9) -8.4% -15.1% -15.8%
Transportation (33.4) (34.0) -1.8% -10.2% -9.9%
Commissions (6.4) (7.5) -15.2% -1.9% -2.2%
Advertising (9.7) (12.4) -22.2% -2.9% -3.6%
 
Other Selling and G&A (69.8) (71.4) -2.1% -21.3% -20.8%
of which: Depreciation, Amortization   (5.2) (5.9)   -13.0%   -1.6% -1.7%
EBITDA   (10.8) 2.6       -3.3% 0.8%
                 
EBIT   (23.1) (10.3)       -7.0% -3.0%
 
Interest Income/(Costs), Net (0.3) (0.1)
Foreign Exchange, Net (1.6) (1.3)
Other Income/(Cost), Net   (10.2) 0.0          
Earning before Income Taxes   (35.2) (11.7)       -10.7% -3.4%
 
Current taxes (3.4) (2.3) -1.0% -0.7%
                 
Net result   (38.7) (14.0)       -11.8% -4.1%
 
Minority interest (0.2) (0.1)
                 
Net Group Result   (38.9) (14.0)       -11.8% -4.1%
                 
Net Group Result per Share   (0.71) (0.26)          
 
                 
Key Figures in U.S. dollars Nine months ended on Change Percentage of Sales
(millions, except per share data)   30-Sep-13 30-Sep-12   %   30-Sep-13 30-Sep-12
 
Total Net Sales 430.8 449.6 -4.2% 100.0% 100.0%
Industrial Margin 126.3 151.0 -16.3% 29.3% 33.6%
EBIT (30.3) (13.6) -7.0% -3.0%
Net Group Result (51.1) (18.4) -11.8% -4.1%
Net Group Result per Share (0.93) (0.34)
 
Average exchange rate

(U.S.$ per 1€)
1.3133
                 
 
(*) Purchases plus beginning stock minus final stock and leather processing
 

                 
UPHOLSTERY NET SALES BREAKDOWN
           

GEOGRAPHIC BREAKDOWN
NET SALES (million euro) NET SALES (in seats sold)
 
Nine months ended on Nine months ended on
      30-Sep-13     30-Sep-12   Change 30-Sep-13     30-Sep-12   Change
 
Americas 123.1 41.8% 124.9 41.8% -1.5% 608,753 49.0% 613,043 49.8% -0.7%
Natuzzi Italia 10.7 3.6% 11.6 3.9% -8.3% 23,557 1.9% 27,541 2.2% -14.5%
Other brands (*) 112.4 38.2% 113.3 37.9% -0.8% 585,196 47.1% 585,502 47.5% -0.1%
 
Europe (ex Italy) 100.5 34.2% 106.8 35.7% -5.9% 383,756 30.9% 395,559 32.1% -3.0%
Natuzzi Italia 38.5 13.1% 45.6 15.2% -15.5% 81,728 6.6% 93,515 7.6% -12.6%
Other brands (*) 62.0 21.1% 61.3 20.5% 1.2% 302,028 24.3% 302,044 24.5% 0.0%
 
Italy (Natuzzi Italia) 21.2 7.2% 22.9 7.7% -7.4% 69,164 5.6% 67,820 5.5% 2.0%
 
Rest of the World 49.4 16.8% 44.2 14.8% 11.7% 180,189 14.5% 155,018 12.6% 16.2%
Natuzzi Italia 22.9 7.8% 21.4 7.2% 7.0% 49,512 4.0% 46,478 3.8% 6.5%
Other brands (*) 26.4 9.0% 22.8 7.6% 16.1% 130,677 10.5% 108,540 8.8% 20.4%
                                             
Total     294.2   100.0%     298.9   100.0%   -1.6% 1,241,862   100.0%     1,231,440   100.0%   0.8%
 

BREAKDOWN BY BRAND
Net Sales (million euro) Net Sales (in seats)
 
Nine months ended on Nine months ended on
      30-Sep-13     30-Sep-12   Change 30-Sep-13     30-Sep-12   Change
 
Natuzzi Italia 93.4 31.7% 101.6 34.0% -8.1% 223,961 18.0% 235,354 19.1% -4.8%
 
Other brands (*) 200.9 68.3% 197.3 66.0% 1.8% 1,017,901 82.0% 996,086 80.9% 2.2%
                                             
Total     294.2   100.0%     298.9   100.0%   -1.6% 1,241,862   100.0%     1,231,440   100.0%   0.8%
 
(*) Natuzzi Editions/Leather Editions and unbranded
 

 
Natuzzi S.p.A. and Subsidiaries
Unaudited Consolidated Profit & Loss for the third quarter 2013 & 2012 on the basis of Italian GAAP
(expressed in millions Euro)
   
Three months ended on Change Percentage of Sales
   

30-Sep-13

30-Sep-12
  %  

30-Sep-13

30-Sep-12
 
Upholstery net sales 92.5 97.5 -5.1% 89.6% 87.3%
Other sales   10.7 14.2   -24.1%   10.4% 12.7%
Total Net Sales   103.3 111.7   -7.5%   100.0% 100.0%
 
Consumption (*) (48.1) (48.5) -0.9% -46.5% -43.4%
Labor (17.4) (16.9) 3.3% -16.9% -15.1%
Industrial Costs (7.2) (6.9) 4.5% -7.0% -6.2%
of which: Depreciation, Amortization   (2.5) (2.2)   10.5%   -2.4% -2.0%
Cost of Sales   (72.7) (72.3)   0.6%   -70.4% -64.7%
                 
Industrial Margin   30.6 39.4   -22.4%   29.6% 35.3%
 
Selling Expenses (16.2) (19.1) -15.6% -15.6% -17.1%
Transportation (10.7) (12.2) -12.0% -10.4% -10.9%
Commissions (1.6) (2.6) -38.7% -1.6% -2.4%
Advertising (3.8) (4.3) -11.8% -3.7% -3.9%
 
Other Selling and G&A (23.2) (22.6) 2.7% -22.5% -20.2%
of which: Depreciation, Amortization   (1.8) (1.9)   -6.6%   -1.7% -1.7%
EBITDA   (4.5) 1.8       -4.4% 1.6%
                 
EBIT   (8.8) (2.3)       -8.5% -2.1%
 
Interest Income/(Costs), Net (0.2) 0.1
Foreign Exchange, Net (0.4) (2.0)
Other Income/(Cost), Net   (8.9) (0.3)          
Earning before Income Taxes   (18.3) (4.5)       -17.8% -4.1%
 
Current taxes (0.4) (0.7) -0.4% -0.6%
                 
Net Result   (18.7) (5.2)       -18.1% -4.7%
 
Minority interest 0.0 0.0
                 
Net Group Result   (18.7) (5.2)       -18.1% -4.7%
                 
Net Group Result per Share   (0.34) (0.09)          
 
                 
Key Figures in U.S. dollars Three months ended on Change Percentage of Sales
(millions)  

30-Sep-13

30-Sep-12
  %  

30-Sep-13

30-Sep-12
 
Total Net Sales 136.8 147.9 -7.5% 100.0% 100.0%
Industrial Margin 40.5 52.2 -22.4% 29.6% 35.3%
EBIT (11.7) (3.1) -8.5% -2.1%
Net Group Result (24.8) (6.9) -18.1% -4.7%
Net Group Result per Share (0.45) (0.13)
 
Average exchange rate (U.S.$ per 1€) 1.3247
                 
 
(*) Purchases plus beginning stock minus final stock and leather processing
 

               
UPHOLSTERY NET SALES BREAKDOWN
             

GEOGRAPHIC BREAKDOWN
NET SALES (million euro) NET SALES (in seats sold)
 
Three months ended on Three months ended on
      30-Sep-13     30-Sep-12   Change 30-Sep-13     30-Sep-12   Change
 
Americas 38.6 41.7% 43.5 44.6% -11.2% 192,940 48.8% 210,195 52.0% -8.2%
Natuzzi Italia 3.1 3.4% 3.5 3.6% -10.7% 6,951 1.8% 7,416 1.8% -6.3%
Other brands (*) 35.5 38.3% 40.0 41.0% -11.2%

185,989
47.0%

202,779
50.2% -8.3%
 
Europe (ex Italy) 30.0 32.4% 32.7 33.5% -8.2% 117,158 29.6% 123,730 30.6% -5.3%
Natuzzi Italia 11.5 12.4% 12.3 12.7% -7.1% 25,628 6.5% 24,526 6.1% 4.5%
Other brands (*) 18.5 20.0% 20.3 20.9% -8.9% 91,530 23.1% 99,204 24.5% -7.7%
 
Italy (Natuzzi Italia) 5.7 6.2% 5.6 5.7% 2.50% 20,242 5.1% 16,320 4.0% 24.0%
 
Rest of the World 18.2 19.6% 15.8 16.2% 15.3% 65,305 16.5% 54,072 13.4% 20.8%
Natuzzi Italia 8.6 9.3% 7.7 7.8% 12.3% 18,702 4.7% 16,027 4.0% 16.7%
Other brands (*) 9.6 10.4% 8.1 8.3% 18.2% 46,603 11.8% 38,045 9.4% 22.5%
                                             
Total     92.5  

100.0%
    97.5   100.0%   -5.1% 395,645   100.0%     404,317   100.0%   -2.1%
 

BREAKDOWN BY BRAND
Net Sales (million euro) Net Sales (in seats)
 
Three months ended on Three months ended on
      30-Sep-13     30-Sep-12   Change 30-Sep-13     30-Sep-12   Change
 
Natuzzi Italia 28.9 31.3% 29.1 29.9% -0.6% 71,523 18.1% 64,289 15.9% 11.3%
 
Other brands (*) 63.6 68.7% 68.4 70.1% -7.0% 324,122 81.9% 340,028 84.1% -4.7%
                                             
Total     92.5  

100.0%
    97.5   100.0%   -5.1% 395,645   100.0%     404,317   100.0%   -2.1%
 
(*) Natuzzi Editions/Leather Editions and unbranded
 

       
Natuzzi S.p.A. and Subsidiaries

Unaudited Consolidated Balance Sheets on the basis of Italian GAAP(Expressed in millions of Euro)
 
ASSETS     30-Sep-13     31-Dec-12
 
Current assets:
Cash and cash equivalents 63.5 77.7
Marketable debt securities 0.0 0.0
Trade receivables, net 81.9 93.1
Other receivables 52.6 51.0
Inventories 83.6 82.3
Unrealized foreign exchange gains 0.1 0.9
Prepaid expenses and accrued income 1.6 2.0
Deferred income taxes     1.0     0.5
Total current assets     284.3     307.5
 
Non-current assets:
Net property, plant and equipment 154.2 161.5
Other assets     8.5     7.1
Total non-current assets     162.7     168.5
 
TOTAL ASSETS     447.0     476.1
 
LIABILITIES AND SHAREHOLDERS' EQUITY      
 
Current liabilities:
Short-term borrowings 28.5 26.9
Current portion of long-term debt 3.3 3.5
Accounts payable-trade 56.5 63.3
Accounts payable-other 23.4 21.0
Accounts payable-shareholders for dividends 0.0 0.1
Unrealized foreign exchange losses 0.0 0.0
Income taxes 10.8 9.2
Deferred income taxes 0.0 1.1
Salaries, wages and related liabilities     10.7     8.0
Total current liabilities     133.2     133.2
 
Long-term liabilities:
Employees' leaving entitlement 25.4 25.7
Long-term debt 4.7 7.3
Deferred income taxes - long term 1.1 0.0
Deferred income for capital grants 9.1 9.2
Other liabilities 30.5 17.0
             
Total long-term liabilities     70.7     59.2
             
Minority interest     2.7     2.5
 
Shareholders' equity:
Share capital 54.9 54.9
Reserves 42.8 42.8
Additional paid-in capital 8.4 8.4
Retained earnings 134.2 175.1
             
Total shareholders' equity     240.3     281.1
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY     447.0     476.1
 

       
Natuzzi S.p.A. and Subsidiaries
 
Consolidated Statements of Cash Flows Nine months ended on
(Expressed in million of Euro)     30-Sep-13     30-Sep-12
Cash flows from operating activities:
Net earnings (loss) (38.9) (14.0)
 
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 12.3 13.0

Write-off of fixed assets
- -
Impairment of long lived assets - -
Deferred income taxes (0.5) 0.2
Minority interest 0.2 0.1
(Gain) loss on disposal of assets (0.1) 0.6
Unrealized foreign exchange losses (gains) 0.8 (0.3)
Extraordinary items, net 11.4 -
Deferred income for capital grants (0.3) (0.4)
Non monetary operating items 23.8 13.2
 
Change in assets and liabilities:
Receivables, net 10.0 (0.5)
Inventories (1.3) 8.2
Prepaid expenses and accrued income 0.4 (0.7)
Other assets 0.7 (5.3)
Accounts payable (8.8) (16.8)
Income taxes 1.6 (0.3)
Salaries, wages and related liabilities 2.7 2.5
Employees' leaving entitlement - -
Other liabilities 3.2 (0.3)
Net working capital     8.6     (13.2)
 
Net cash generated/(used) by operating activities     (6.5)     (14.0)
 
Cash flows from investing activities:
Property, plant and equipment:
Additions (6.0) (2.7)
Disposals 0.1 1.6
Chinese relocation compensation - -
Other Assets - -
Marketable debt securities - -
Proceeds from sales - -
Purchase of business, net of cash acquired     -     (0.2)
Disposal of business     -     -
 
Net cash generated/(used) by in investing activities     (5.8)     (1.3)
 
Cash flows from financing activities:
Long-term debt:
Proceeds - -
Repayments (2.9) (2.8)
Short-term borrowings 1.6 4.9
Capital injection - -
Dividends paid to minority interests (0.2) -
 
Net cash generated/(used) by financing activities     (1.5)     2.1
 
Effect of translation adjustments on cash (0.4) 0.1
 
Increase (decrease) in cash and cash equivalents     (14.2)     (13.1)
 
Cash and cash equivalents, beginning of the year     77.7     94.0
 
Cash and cash equivalents, end of the period     63.5     80.9

Copyright Business Wire 2010

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