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Natuzzi Reports Net Loss On Increased Sales Volume

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--Total Net Sales up 5.8% to EUR 483.9 Million (or up 11.1% at Constant Exchange Rate) Units Sold up 7.5% over the Same Period in 07 --Operating Loss at EUR 29.5 Million (or EUR 16.3 at Constant Exchange Rate) vs. Operating Loss of EUR 28.2 Million Reported in the Same Period in 07 --Net Loss at EUR 42.1 Million vs. Net Loss of EUR 23.1 Reported in the Same Period in 07 --Expected Full Year 2008 Operating Loss in the EUR 35-40 Million Range vs. Operating Loss of EUR 49.1 Million in FY 2007 The Board of Directors of Natuzzi S.p.A. Natuzzi, Italy's largest furniture manufacturer and one of the world's leading makers of leather-upholstered furniture, presented consolidated financial results for the third quarter and first nine months of 2008. Aldo Uva, Chief Executive Officer of the Natuzzi Group, commented: "Despite the 5.8% growth of our net sales reported in the first nine months of 2008, a highly positive performance in a singularly downbeat shopping environment, our profitability was by no means satisfactory. Our operating profitability suffered from unfavorable exchange rates, with a net impact of nearly EUR 20 million, and from excessively high operational costs. The improvement of our gross margin is one of the top strategic priorities of our three-year plan, and we are continuing to see abundant signs that this business plan is built on the right assumptions. We are aware that there is a lot of work ahead of us, but we are confident that we will recover profitability within the next few quarters." Mr. Uva added: "In the past few weeks, beyond the finalization of our business plan, we have considerably strengthened our managerial base with the arrival of seasoned professionals as Mariano Domingo, Chief Financial Officer & IT/Lean, and Umberto Bedini, SVP Operations, who will put their vast international experience behind the delivery of our targets. For full year 2008, we are expecting the growth in total sales to be roughly in line with the level achieved in the first nine months, while our operating loss should be in the range of EUR 35 to 40 million, as compared to a loss of EUR 49.1 million reported for full year 2007." CONSOLIDATED FINANCIAL RESULTS NET SALES In the third quarter ended September 30, 2008, total net sales of the Natuzzi Group amounted to EUR 142.3 million, up slightly from EUR 141.3 million reported for the third quarter of 2007. Third quarter units sold increased by 3.8% compared to the same quarter of the previous year. In the first nine months ended September 30, 2008, total net sales of the Natuzzi Group amounted to EUR 483.9 million, up 5.8% from EUR 457.5 million reported for the same period of 2007. During the first nine months of 2008, units sold increased by 7.5% compared to the same period of the previous year. In the third quarter of 2008, sales of seats under the Natuzzi brand decreased by 8.5% reflecting decreases of 9.8% in the Americas and 11.0% in Europe, whereas unit sales in the Rest of the World rose by 11.4%. During the same period sales of seats under the Italsofa brand increased by 12.2% thanks to positive results in the Americas (+32.4%) and in the Rest of the World (+35.0%), partly off set by a 11.8% decrease in Europe. In the first nine months of 2008, sales of seats under the Natuzzi brand decreased by 1.5%, reflecting increases of 0.2% in the Americas and 13.1% in the Rest of the World, offset by a 5.7% decrease in Europe. During the same period, sales of seats under the Italsofa brand rose by 15.1%, achieving positive results in the Americas (+20.0%), Europe (+5.9%) and in the Rest of the World (+53.4%). During the third quarter, five new Natuzzi stores were opened (one each in The Netherlands, the US, Russia, Italy and Qatar), whereas three Natuzzi stores were closed (one each in Portugal, Switzerland and Russia), bringing the total number of Natuzzi points of sales to 314 at the end of September 2008. Furthermore, in the quarter, two new Italsofa stores were opened in China, bringing the total number of Italsofa stores to 12. Finally, two new concessions were opened in the UK, bringing the total number of concessions operated by the Group to 17. The total number of Natuzzi Galleries worldwide was 420 at September 30, 2008. GROSS PROFIT AND OPERATING RESULTS During third quarter 2008, Gross Profit amounted to EUR 36.7 million (or EUR 40.5 million at constant exchange rates), as compared to a Gross Profit of EUR 38.6 million in third quarter 2007. For the third quarter of 2008, the Group reported an operating loss of EUR 12.2 million, as compared to an operating loss of EUR 11.0 million in the third quarter of 2007. On a constant exchange rate basis, the Group would have reported an operating loss for the third quarter of 2008 of EUR 9.8 million. During the first nine months of 2008, Gross Profit amounted to EUR 128.9 million (or EUR 147.8 million at constant exchange rates), as compared to a Gross Profit of EUR 130.6 million reported for the same period in 2007. For the nine month period ended September 30, 2008, the Group reported an operating loss of EUR 29.5 million, as compared to an operating loss of EUR 28.2 million in the same period of 2007. On a constant exchange rate basis, the Group would have reported an operating loss for the third quarter of 2008 of EUR 16.3 million. FOREIGN EXCHANGE, NET During the third quarter of 2008, the Group incurred a net foreign exchange loss of EUR 3.2 million, as compared to a net foreign exchange loss of EUR 5.9 million in the prior year's comparable quarter. During the first nine months of 2008 the Group incurred a net foreign exchange loss of EUR 8.1 million, as compared to a net foreign exchange loss of EUR 4.8 million in the prior year's comparable period. OTHER INCOME (LOSS), NET During the third quarter of 2008 the Group reported a loss EUR 0.9 million as compared to a gain of EUR 0.4 million in 2007. During the first nine months of 2008 the Group reported a loss EUR 2.1 million as compared to a gain of EUR 3.3 million in 2007. The decrease was mainly attributable to exceptional income such as a refund of tax and write off of a provision for legal action occurred during the first nine months of 2007. TAXES For the third quarter of 2008 the Group reported EUR 0.1 million of tax benefits as compared to tax benefits of EUR 1.9 million. During the first nine months of 2008 the Group recorded income taxes for EUR 2.3 million, as compared to EUR 5.2 million of tax benefits for the same period of 2007. NET RESULT AND GROUP EARNINGS PER COMPANY'S SHARE For the quarter ended September 30, 2008, the Group reported a net loss of EUR 16.2 million, or EUR 0.30 per share (ADR), compared to a net loss of EUR 14.1 million, or EUR 0.26 per share, in the third quarter of 2007. For the first nine months of 2008, the Group reported a net loss of EUR 42.1 million, or EUR 0.77 per share, as compared to a net loss of EUR 23.1 million, or EUR 0.42 per share, for the first nine months of 2007. BALANCE SHEET AND CASH FLOW Cash and cash equivalents were EUR 57.1 million at September 30, 2008, as compared to EUR 97.7 million at September 30, 2007. The most significant changes in the Group's cash flows between the first nine months of 2008 and 2007 are described below. Cash flows used in operating activities were EUR 26.2 million in 2008, as compared to cash flows used by operations of EUR 11.1 million in 2007. This decrease of EUR 15.1 million from 2007 to 2008 resulted principally from the Group's net loss of EUR 42.1 million in 2008, as compared to a net loss of EUR 23.1 million in 2007. In 2008 working capital was affected by the negative impact of trade receivables, net and accounts payable, partly offset by positive impact generated by inventories. Cash flows used in investment activities in 2008 decreased EUR 10.7 million to EUR 8.2 million, due to a lower level of investments for the first nine months of 2008 as compared to the same period of prior year. Cash provided by financing activities in 2008 totaled EUR 2.9 million up from EUR 0.5 million reported one year ago. 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 2007 consolidated revenues of EUR 634.4 million on, Natuzzi is Italy's largest furniture manufacturer. The Natuzzi group exports its innovative high-quality sofas and armchairs to 123 markets on five continents under two brands, Natuzzi and Italsofa. 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 certified.

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