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Natuzzi Reports American Sales Decrease Of 6.8 Percent

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The Board of Directors of Natuzzi S.p.A., a leading manufacturer of leather-upholstered furniture, presented the fourth quarter 2007 financial results and the project of the consolidated financial statements for the full year 2007. NET SALES Natuzzi total net sales during the fourth quarter of 2007 decreased by 8.4 percent at EUR 176.9 million from EUR 193.1 million reported in the same quarter of 2006. Units sold in the last three months of 2007 decreased by 5.1 percent. Considering the whole 2007, total net sales were at EUR 634.4 million, down 13.7 percent as compared to EUR 735.5 million reported for the year ended on December 31, 2006. In the fourth quarter of 2007 upholstery net sales were at EUR 157.2 million, down 9.8 percent with respect to the previous year same quarter. Other sales (principally living-room accessories and raw material produced by the Group and sold to third parties) increased by 4.2 percent at EUR 19.7 million over fourth quarter 2006. During the last three months of 2007, net sales in the Americas decreased by 6.8 percent at EUR 54.5 million with respect to 2006 fourth quarter and by 12.7 percent at EUR 89.2 million in Europe. Net sales in the rest of the world were flat at EUR 13.5 million. Twelve new stores were opened in 2007 fourth quarter (4 in UK, 2 in France and 1 each in Italy, Latvia, Netherlands, Australia, Taiwan, Mexico), thus bringing the total number of stores (Natuzzi Stores and Divani & Divani by Natuzzi) to 302 as of December 31, 2007. As of the same date, there were 483 Natuzzi Galleries worldwide. Leather upholstered furniture net sales during 2007 fourth quarter decreased by 6.3 percent at EUR 142.9 million and fabric upholstered net sales by 34.1 percent at EUR 14.3 million. During the last quarter of 2007, net sales for the Natuzzi branded products were at EUR 91.4 million, down 16.1 percent from EUR 108.9 million reported in 2006 same quarter, whereas Italsofa products increased by 0.8 percent at EUR 65.8 million. GROSS & OPERATING RESULTS For the fourth quarter of 2007 the Group reported a gross profit of EUR 43.2 million, down from EUR 58.5 million in 2006 fourth quarter. In the same period, gross margin decreased at 24.4 percent from 30.3 percent in 2006 comparable quarter. Considering the whole 2007 the Group had a gross profit of EUR 173.8 million as compared to a gross profit of EUR 244.9 million in 2006. For the twelve month period, gross margin decreased from 33.3 percent in 2006 to 27.4 percent in 2007. During the last three months of 2007 the Group reported a net operating loss of EUR 20.9 million as compared to a net operating loss of EUR 3.4 million in the previous year comparable quarter. For the twelve month period ended on December 31, 2007, the Group reported a net operating loss of EUR 49.1 million, versus a net operating income of EUR 16.5 million in 2006. FOREX AND TAXES In the fourth quarter of 2007 the Group had a net foreign exchange loss of EUR 2.3 million as compared to a net foreign exchange gain of EUR 2.8 million in 2006 same quarter. Group’s income taxes in the last quarter of 2007 were at EUR 16.6 million, as compared to income taxes of EUR 1.0 million in 2006 last quarter. NET RESULT AND GROUP EARNINGS PER COMPANY’S SHARE For the quarter ended on December 31, 2007, the Group reported net losses of EUR 39.6 million (or EUR 0.72 losses per share), versus Group’s net losses of EUR 5.1 million (or EUR 0.09 losses per share) in the fourth quarter of 2006. Considering the whole 2007, the Group had net losses of EUR 62.6 million (or EUR 1.14 losses per share), versus net earnings of EUR 12.3 million (or EUR 0.22 earnings per share) reported for the year 2006. Pasquale Natuzzi, Chairman and CEO, commented: “In 2007 the Group went through an increasingly difficult macroeconomic environment, still affecting the furniture industry today, coupled with the steady strengthening of the Euro against the US dollar. Besides, in last December our Natuzzi-branded production and deliveries were negatively impacted by exceptional bad weather conditions at the Italian manufacturing sites as well as by a nation-wide strike of the transportation workers. As a result of the above, the Group reported a double-digit net sales decrease year over year, in particular in the medium-high segment manufactured in Italy”. “Due to lower volume sales, unfavourable currency conversion of US revenues, higher raw material prices and the poor performance of our retail network and South-American manufacturing plants, the Group reported disappointing operating losses in the fourth quarter and full year 2007, but still maintains a sound net financial position”. Mr. Natuzzi concluded: “Top management is working on the operational details of a three years business plan covering the period 2008-2010 which will be ready in the next few weeks. As far as 2008 is concerned, year-to-date seats sold have increased at low double-digit rate compared to the same period of 2007 also because of accumulated back-log at the end of last year. In addition to that, we expect a good market response for our new collections at the forthcoming High Point and Milan International fairs. In light of the aforesaid, we should increase unit sales in the region of 10 percent on a yearly basis and, through a more efficient cost structure, also break even at the operating level.” ABOUT NATUZZI S.P.A. Founded in 1959 by Pasquale Natuzzi, Natuzzi S.p.A. designs and manufactures a broad collection of leather-upholstered residential furniture. Italy’s largest furniture manufacturer, Natuzzi is the global leader in the leather segment, exporting its innovative, high-quality sofas and armchairs to 123 markets on 5 continents. Since 1990, Natuzzi has sold its furnishings in Italy through the popular Divani & Divani by Natuzzi chain of 125 stores, and 1 Natuzzi Store. Outside Italy, the Company sells to various furniture retailers, as well as through 173 licensed Divani & Divani by Natuzzi and Natuzzi Stores. Natuzzi S.p.A. was listed on the New York Stock Exchange on May 13, 1993. The Company is ISO 9001 and 14001 certified.

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