Italtile overcomes several challenges to raise headline earnings by up to 9%

ITALTILE, global retailer of tiles and home sanitaryware, anticipates a small decline in turnover for the year to June 30 compared with the very high figure the year before that had been boosted by pandemic stay-athome restrictions.

The group said in a sales update yesterday that trading conditions remained challenging.

Higher inflation caused input and other operating cost increases and pressure on manufacturing margins, while there had been a consumer shift away from home improvement to other recreation and discretionary purchases.

“Lower customer footfall and a decline in demand was widespread across the industry,” the group said.

Global supply chain disruptions caused instability in supply and pricing, although this eased towards the end of the year.

There was intensified competition in the local market; consumer confidence had declined; there was subdued investment sentiment and increased interest rates and inflation, which caused homeowners to scale down or defer renovations and building projects. Load shedding had also impacted the group.

These challenges had been countered

by focusing on growth levers within group control, by innovating and investing on the shopping experience of its customers, by growing sales, productivity and cost leadership, and

through partnerships with its people, the group said.

Retail store turnover reported by group brands CTM, Italtile Retail, TopT and U-Light rose 2.8 percent compared

to the prior period. Like-for-like retail store turnover grew 1.2 percent.

Manufacturing sales by Ceramic Industries and Ezee Tile Adhesive Manufacturers increased 1.8 percent combined – the division’s results were not comparable with the prior period due to the resumption of the phased closure of all of Ceramic’s factories over December 2021 and January 2022 for routine maintenance, compared to no shutdowns in the prior period due to unprecedented demand after the pandemic-mandated shutdown from March to May 2020.

In addition, Ceramic’s Samca floor tile factory was closed for five months for upgrades, spanning the prior and current year.

Integrated supply chain importer businesses Cedar Point, International Tap Distributors and Distribution Centre, reported a 2.4 percent drop in sales, mainly due to product unavailability during some periods and weaker consumer demand.

Group earnings per share (Eps) and headline earnings per share (Heps) were expected to increase by between 7 and 9.2 percent, and by between 7.5 and 9.7 percent, respectively.

The increase in Eps and Heps was due to modest profit growth, complemented by a decrease in the non-controlling interest percentage in Ceramic and Ezee Tile, following the vesting of Ceramic retention shares; the purchase of founder Mike du Plessis’ 26 percent shareholding in Ezee Tile following his retirement on June 30, 2021; and a decrease in the number of shares due to share repurchases.