Natuzzi Narrows 4th Quarter Loss, Boosts Sales

Furniture World Magazine

The Board of directors of Natuzzi S.p.A., a leading manufacturer of leather-upholstered furniture, announced the fourth quarter and fiscal 2008 financial results. Fourth quarter 2008 Summary: -- Net Sales rose 3,0% to EUR 182,1 M as compared to EUR 176,9 M in 4Q 2007 -- Operating loss was EUR 5,5 M as compared to EUR 20,9 M in 4Q 2007 -- Net loss totaled EUR 19,8 M compared to a loss of EUR 39,6 M for the same period of 2007 Fourth Quarter Results: Natuzzi Group net sales during the fourth quarter of 2008 increased by 3,0% to EUR 182,1 M as compared to the same quarter last year. Upholstery sales were EUR 161,1 M or 88,5% of net sales, compared to EUR 157.2 M 88,9% of total net sales in the fourth quarter of 2007. The contribution to upholstery net sales by geographic area was as follows: Europe for 52%; Americas 39% and rest of the world 9%. For the fourth quarter of 2008 the Group reported a gross profit of EUR 58,4 M, an increase of 35,1% as compared to EUR 43,2 M for the same quarter last year. Gross margin in the fourth quarter of 2008 was 32,0% as compared to 24,4% in the fourth quarter of 2007. The improvement in gross margin was attributable to lower purchasing and labor costs. Operating loss was EUR 5,5M went in the fourth quarter of 2008 as compared to a loss of EUR 20,9 M in the same period last year. Net loss was EUR 19,8 M as compared to a net loss of EUR 39,6 M for the same period of 2007. Pasquale Natuzzi, Chairman and CEO, commented: "We are pleased to have met our fourth quarter and full year expectations despite the adverse economic environment. We achieved an increase in sales and significant reduction in our cost of goods sold in 2008. We reduced our operating loss to EUR 35,0 M from EUR 49,1 M in 2007 and we will continue with our cost reduction plan. We remain on track with our previously announced 3-year business plan approved by our Board of Directors. We have an extremely skilled and committed management team and remain dedicated to achieving our goal of EUR 1 billion net sales and 15% operating Margin in 2011." Fiscal 2008 Results: For fiscal 2008, net sales were EUR 666,0 M an increase of 5% from EUR 634,4 M in 2007. Upholstery sales were EUR 587,8 M or 88,3% of net sales, as compared to EUR 563,5 M or 88,8% of total net sales in fiscal 2007. The contribution to full year upholstery net sales by geographic area was as follows: Europe for 55%; Americas 36% and rest of the world 9%. The Group reported a Gross profit of EUR 187,3 M for 2008. This represented a 7,7% increase over the previous year. In fiscal 2008 operating loss was EUR 35,0 M as compared to a loss of EUR 49,1 M in 2007. For fiscal 2008 the net loss was EUR 61,9 M as compared to EUR 62,7 M for fiscal 2007. The net loss for the full year reflected an impairment charge of EUR 5 M and accrued costs of approximately EUR 4,5 M. As the end of December 2008, stores worldwide totaled 325 (including Italsofa stores and Divani & Divani stores). Balance Sheet Highlights: The Natuzzi Group ended fiscal 2008 with cash of EUR 47,3 M and no long term debt. Total Inventory declined 14,2% to EUR 92,0 M at the end of 2008. Shareholder's equity was EUR 345,2 M. About Natuzzi: 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.