Italtile said yesterday that difficult trading conditions and internal inefficiencies impacted negatively on the group's performance, with disappointing results in its South African businesses although its East African and Australian operations reported better results.
In its group results for the year ended June 30, 2023, the retailer and manufacturer of tiles, bathroom ware, and related products said its results failed to meet expectations as profits had decreased leading to a cut in dividend.
The group reported that earnings per share were down 13% to 132.6 cents, while headline earnings per share were down 13% to 132.3 cents. Trading profit was down 15% to R2.3 billion,.
The group said the ordinary dividend per share was down 13% to 53 cents.
Group revenue improved by 2%, while selling price inflation was 6.7%. Stock levels increased by 2.3% and like-for-like retail store turnover decreased by 0.3%.
Italtile CEO Lance Foxcroft said: "We were affected by the subdued demand and not being able to run our factories at full capacity. So we are a little bit disappointed with the results, but nevertheless, we are cognisant of the fact that it's been a very tough trading environment the last six months, and we have performed better than most of our peers".
He said in the South African business the consumer had been affected by inflation and interest rate hikes.
Foxcroft said the company would continue to invest in its people, technology, and business to stay ahead of competitors and unlock value within the business.
"We have been through a difficult period in our manufacturing business. We've restructured resources to make sure that we can unlock the value of our latest projects. Going forward, we expect conditions to be tough. But for us, we are ready to continue to leverage our market-leading position with the customer to take a bit of market share," he said.
Italtile said its retail’s unique premium-end offering of cutting-edge international brands continued to lead its market segment, growing sales and profits, and improving productivity.
The group said the Commercial Projects division, which contributes 10% to the brand’s total turnover, had benefited from significant improvement in market activity.
Foxcroft said: “We are hopeful that the momentum in the projects segment will gain traction, which will also impact positively on our manufacturing division.”
The group said CTM operated in the most competitive space in the sector and a segment where consumers were extremely financially stressed. "Notwithstanding widespread improvements to the customer shopping experience, the brand’s results reflect the external challenges, with a slight decline in overall sales, profits, and margins, albeit the East African operation reported pleasing results," it said.
“TOPT reported solid growth in sales value and volumes. Higher profits were achieved through improved cost leadership, although margins declined slightly.”
Looking ahead, Foxcroft said: “Opportunities for growth lie in our focus areas for the forthcoming year. These include growing sales and market share through leading products and services; improving execution of operational excellence and efficiency; and developing our teams and depth of leadership.
"We will also pursue our purpose-driven approach to responsible citizenship and sustainability.”
He cautioned that despite the company’s confidence that operational improvements could be made in the business, it was mindful that the economic environment will determine consumer demand in the market.
“We will continue to focus on the growth levers within our control and influence. While trading conditions are challenging, the long-term dynamics of the housing market remain favourable, and the board has confidence in the group’s proven business model and experienced teams,” he said.
In later afternoon trade, Italtile’s share price was up 1.31% at R12.40.