Italtile, manufacturer, distributor and retailer of tiles and other homeware goods, said consumer confidence in the construction and building sector remained subdued and sales fell during the five months to November 30, 2023, compared with the same period a year before.
“Homeowners’ investment sentiment and spend continued to be constrained by sustained adverse social and economic conditions and higher living costs, interest rates and inflation, which drove up building costs and impacted on affordability of products, installations and new build projects,” the group said yesterday in a sales update.
Generally softer retail demand and over-stocked position of many wholesalers in the industry continued to impact negatively on sales in the manufacturing businesses, specifically Ceramic Industries Proprietary.
Competition and margin pressure intensified, with opportunistic importers sacrificing margin to gain market share.
The group’s system-wide retail turnover, reported by its brands, CTM, Italtile Retail and TopT, declined 2.9% compared with the prior period.
Sales by the integrated import supply chain businesses were consequently impacted by the weaker group retail sales.
Combined manufacturing sales reported by Ceramic Industries and Ezee Tile Adhesive Manufacturers, to both group and third-party customers, decreased by 5.9% compared with the prior period.
The group had cautioned in the last year-end results on August 28 that in the absence of strong sales volumes and and optimal use of manufacturing capacity, the business’s cost base and profitability would be negatively affected.
Worse still, the weak economic growth and difficult trading conditions experienced during the review period were expected to persist for the remainder of the financial year to June 2024.
“Notwithstanding muted consumer sentiment and strained disposable income, management will continue to focus on the growth levers within the group’s control and influence, with continued innovation and investment in delivering industry-leading products and an unsurpassed shopping experience for customers,” Italtile’s directors said.
The share price inched higher R10.96 on the JSE yesterday morning, 20.6% lower than the same price a year before.
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