No relief in sight for Italtile as it flags further losses
Bathroomware group Italtile, which owns CTM and U-Light, expects earnings to decline by about a sixth for the half-year due to a slowdown in sales volumes.
Pandemic-induced demand for home improvement saw the group report improved profits and declare record interim dividends until June 2022, but SA’s biggest retailer and manufacturer of tiles, bathroomware and related products has since been struggling to gain traction.
In a voluntary trading update for the six months ending December, Italtile on Monday said headline earnings per share (Heps), the primary profit measure in SA, is expected to decline by between 13.1% and 17% to as low as 65.8c.
This points to further losses as in its results for the year to end-June the group stated its profit was down 14% to R1.7bn, while Heps was down 13% to 132.3c.
Italtile shares were down 3.16% to R11.33 on Monday after the announcement. The share climbed 4.4% since the start of 2024 but has slipped more than 34% in the last three years.
Italtile, founded in 1969 and valued at R15.4bn on the JSE, has a portfolio of differentiated, complementary, focused retail formats and manufacturing facilities with about 200 stores targeting lower-middle to upper-end consumers.
The industry is facing surging transport and energy costs, subdued consumer confidence in the construction and building sector, high interest rates and inflation that have driven up building costs and affected the affordability of products, installations and new build projects.
In its sales update published in December, the retailer whose brands also include CTM, U-Light and TopT, said it had subsequently experienced a 2.9% decline year on year in turnover, hurting its integrated import supply chain businesses, with manufacturing sales decreasing 5.9% year on year.
The group is also facing a margin squeeze and increased competition, and it noted that opportunistic importers were sacrificing margin to gain market share.
Competitor Cashbuild has also reported taking a hit in 2023 with Heps dropping 37% in the year to the end of June, while falling sales saw it report an operating profit plunge of 56%.
Italtile group results are expected to be published on February 19.
Companies in this Story
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.