Natuzzi S.p.A.First Quarter Loss Widens

Furniture World Magazine

The Board of Directors of Natuzzi S.p.A., a leading manufacturer of leather-upholstered furniture, announced first quarter fiscal 2009 financial results. First quarter 2009 Summary: - Net Sales totaled €111.3 million as compared to €172.8 million in 1Q 2008 - Operating loss was €16.6 million as compared to €12.1 million in 1Q 2008 - Net loss totaled €10.4 million compared to a loss of €23.4 million in 1Q 2008 First Quarter Results Natuzzi Group Net Sales during the first quarter of 2009 decreased 35.6% to €111.3 million as compared to the same quarter last year. Upholstery sales were € 96.9 million or 87.1% of net sales, compared to €153.7 million or 88.9% of total net sales in the first quarter of 2008. The contribution to the first quarter 2009 of upholstery net sales by geographic area was as follows: Europe 61.0%, Americas 30,4%, and rest of the world 8.6%. For the first quarter of 2009 the Group reported a Gross Profit of €28.4 million, a decrease of 35.6% as compared to €44.1 million for the same quarter last year. Gross Profit in the first quarter of 2009 was 25.5% flat to the first quarter of 2008. The Gross Profit deleveraging was offset by lower purchasing and labor costs, indeed the total cost of sales decreased 35,6% passing from €128.7 million to €82.9 million in the first quarter of 2009. SG&A expense for the first quarter of 2009 declined 20% to € 45.0 million. Operating loss was €16.6 million in the first quarter of 2009 as compared to a loss of €12.1 million in the same period last year. Net Group Result was a loss of €10.4 million as compared to a loss of €23.4 million for the same period of 2008. Pasquale Natuzzi, Chairman and CEO, commented: “The furniture industry continues to be under pressure due to a challenging economic environment; as a result, we were unable to increase gross profit due to the decline in net sales although deleveraging was partially offset by a significant reduction in production costs. In the meantime, we continue, in line with our positive trend already started in the last quarter 2008, to make meaningful progress in certain initiatives to increase efficiencies and reduce costs in our business which should lead to significant operating margin expansion and a stronger cash position longer term.” At the end of the first quarter 2009, stores worldwide totaled 323 (including Italsofa stores and Divani & Divani stores). CASH AND SHAREHOLDERS EQUITY The Natuzzi Group ended the first quarter of 2009 with no debit and a cash of €65 million representing an increase of approximately €18 million as compared to the end of 2008. Shareholder’s equity was €334.1 million. About Natuzzi: Founded in 1959 by Pasquale Natuzzi, Natuzzi S.p.A. designs and manufactures a broad collection of residential upholstered furniture. With 2008 year end consolidated revenues of EUR 666,0 million, 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.