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Reviewed Condensed Group Results and Cash Dividend Declaration for the six months ended 31 December 2023
Italtile Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1955/000558/06)
Share code: ITE
ISIN: ZAE000099123
("Italtile" or "the Group")
SHORT-FORM ANNOUNCEMENT REVIEWED CONDENSED GROUP RESULTS AND CASH DIVIDEND DECLARATION
FOR THE SIX MONTHS ENDED 31 DECEMBER 2023
HIGHLIGHTS
- System-wide turnover down 2% to R6,1 billion
(2022: R6,2 billion)
- Trading profit down 17% to R1,1 billion
(2022: R1,4 billion)
- Earnings per share down 15% to 67,5 cents
(2022: 79,5 cents)
- Headline earnings per share down 15% to 67,2 cents
(2022: 79,2 cents)
- Net cash up 76% to R1,5 billion
(2022: R0,8 billion)
- Ordinary dividend per share down 16% to 27,0 cents
(2022: 32,0 cents)
- Net asset value per share up 10% to 684,4 cents
(2022: 620,6 cents)
- Store network 214 down 1%
(June 2023: 216)
(December 2022: 214)
OVERVIEW
Founded in 1969, Italtile Limited is a Proudly South African manufacturer, franchisor and
retailer of tiles, bathroomware and other complementary home-finishing products. The Group's
retail brands are CTM, Italtile Retail and TopT, represented through a total network of
214 stores, including six online webstores. The retail operation is strategically supported
by a vertically integrated supply chain comprising key manufacturers and import operations
and an extensive property portfolio.
TRADING ENVIRONMENT
Trading conditions remained challenging in the six months ended 31 December 2023 ("Review Period").
The global market for ceramic tiles was weak in many countries as macro-economic factors resulted
in a decline in demand after strong growth in the post-pandemic years. South Africa continued to
record low economic growth in 2023, with high levels of unemployment and indebtedness, rising living
costs and decreasing remuneration in real terms. In the building and construction sector, homeowners'
investment sentiment and spend continued to be constrained by sustained high interest rates and
elevated input cost inflation which impacted on affordability of products, installations and new
build projects.
Competition remained intense across the industry. In the retail segment, big-box retailers continued
to roll out stores while the number of independent stores trading in ceramic tiles continued to grow.
In the manufacturing segment, tile producers based locally, in Zambia and Zimbabwe expanded capacity.
Excess global capacity, weak demand and the significant reduction in shipping costs resulted in high
levels of competitively priced imported product. The scheduled opening of a new manufacturer in
Mozambique will undoubtedly lead to further competition during the year.
Mindful of the adverse trading conditions and consumers' price sensitivity, the Group continued to
focus on its primary goal: namely, to deliver an unrivalled, added-value shopping experience for our
customers.
GROUP PERFORMANCE
Management's emphasis during the Review Period was on optimising investments in people, technology
and capital expenditure projects across the business. Key to this focus was improving the execution
of the sales strategy in the retail division, remedying the shortcomings reported in the manufacturing
division over the past year, and extracting the projected benefits of recently commissioned large-scale
capex projects.
Our retail stores are financially sound, underpinned by robust operating models. Encouragingly, the
retail operation's results were creditable, given the high comparable base, fiercely competitive landscape
and weak consumer demand. By continuing to meet our customers' expectations and desires for a beautiful
home, our stores retained their leadership positions in their respective market segments.
While foundations were laid for internal improvements and efficiency enhancements, further progress needs
to be achieved, particularly in Ceramic. Furthermore, the generally softer consumer demand, and
over-stocked position of many wholesalers in the industry, increased competitive pressures. In the absence
of strong volumes and optimal use of manufacturing capacity, this operation's cost base and profitability
were severely affected, as inflationary increases could not be passed on to customers. Ceramic contributes
significantly to Group profits, and hence its poor performance and 32% decline in profits had a sizeable
impact on the results of the Group as a whole.
The Group's strong balance sheet and cash generative nature is evidenced by cash reserves of R1.5 billion
(2022: R0.8 billion).
DECLARATION OF ORDINARY CASH DIVIDEND
The Group's dividend cover is two and a half times. The board of directors of Italtile ("the Board") has
declared an interim gross ordinary cash dividend (number 115) for the Review Period ended 31 December 2023
of 27,0 cents per share(2022: 32,0 cents) out of income reserves to all shareholders of Italtile as at the
record date of Friday, 8 March 2024. The dividend per share is calculated based on 1 321 654 148 shares
(2022: 1 321 654 148 shares) in issue at the date of dividend declaration. The local dividend withholding
tax is 20% ("twenty percent"). The net local dividend amount is 21,60 cents per share for shareholders
liable to pay dividends tax and 27,0 cents per share for shareholders exempt from paying dividends tax.
Italtile's income tax reference number is 9050182717.
Dividend declaration date Monday, 19 February 2024
Last day to trade cum the dividend Tuesday, 5 March 2024
Date to commence trading ex-dividend Wednesday, 6 March 2024
Record date Friday, 8 March 2024
Payment date Monday, 11 March 2024
Share certificates may not be rematerialised or dematerialised between Wednesday, 6 March 2024 and
Friday, 8 March 2024, both days inclusive.
PROSPECTS AND OUTLOOK
Consumer confidence is likely to remain depressed amid concerns regarding the outcome of the upcoming
national elections. Furthermore, the weak economic growth and difficult trading conditions experienced
during the Review Period are likely to persist for the remainder of the current financial year. The
building cycle is only likely to recover once interest rates decline and consumer confidence is restored.
Management's focus in the next six months will be on improving performance. Our operations will remain
strongly differentiated to provide a unique experience for our customers. Executing operational excellence
will be our key driving force across our portfolio of retail and manufacturing assets.
Despite increased competition in the sector, our stores are uniquely positioned to deliver an unrivalled
shopping experience. Our vertically integrated business model, local manufacturing supply and bespoke
solutions of industry-leading fashionable products afford our operators a significant competitive advantage.
In our manufacturing operations there are opportunities to unlock internal efficiencies, optimise our human
capital resource and leverage our investments in cutting-edge technology and equipment to recover market share
and attract new customers.
KEY FOCUS AREA
Notwithstanding subdued consumer sentiment and constrained disposable income, management will continue
to focus on the growth levers within the Group's control, by prioritising consistent innovation and
investment in delivering industry-leading products and an unsurpassed shopping experience for customers.
It is critical that we grow volumes and optimise capacity utilisation to improve our efficiencies and
to drive up profitability. Margin pressure is likely to intensify. Strategically managing margin and
improving efficiencies including enhancements in productivity and cost leadership will remain key
priorities.
Resource security is of paramount importance, specifically to our manufacturing operations. Ensuring
affordable, adequate and sustainable supply of energy will be a critical imperative in the forthcoming
period.
16 February 2024
SHORT-FORM ANNOUNCEMENT
The content of this short-form announcement is the responsibility of the directors. Shareholders are
advised that this short-form announcement represents a summary of the information contained in the
full announcement which is available at: https://senspdf.jse.co.za/documents/2024/jse/isse/ite/interims24.pdf
and on Italtile's website at https://www.italtile.com. This short-form announcement was published on SENS
on Monday, 19 February 2024.
The condensed financial statements were reviewed by PricewaterhouseCoopers Inc. ("PwC"), who expressed
an unmodified review conclusion thereon. Shareholders are advised that, in order to obtain a full understanding
of the nature of the auditor's engagement, and more specifically, the nature of the information reviewed, they
should obtain a copy of PwC's report available at the following link:
https://www.italtile.com/investor-reports-and-results.asp or from the Company Secretary who is contactable at
roxanne@acorim.co.za.
Any investment decisions made by investors and/or shareholders should be based on a consideration of the
full announcement as a whole and investors and shareholders are encouraged to review the full announcement,
as detailed herein.
Both the short-form and full announcement are also available for inspection at the registered offices of
Italtile and sponsor, Merchantec Capital, during business hours, and copies may be obtained at no cost on
request from the Company Secretary, who is contactable at roxanne@acorim.co.za.
Registered office: The Italtile Building, 72 Peter Place, Bryanston, Gauteng, 2191
Postal address: PO Box 1689, Randburg, 2125
Transfer secretaries: Computershare Investor Services Proprietary Limited
Company Secretary: Acorim Proprietary Limited
Sponsor: Merchantec Capital
Auditor: PricewaterhouseCoopers Inc.
www.italtile.com
Date: 19-02-2024 07:15:00
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