Judul : Italtile Limited Announces 11% Decline in Trading Profit Amidst Competitive Market
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Italtile Limited Announces 11% Decline in Trading Profit Amidst Competitive Market
26 Aug 2024 (Johannesburg Stock Exchange) Italtile Limited, a prominent South African manufacturer and retailer of tiles and bathroomware products, reported a significant decline in trading profit for the fiscal year ending June 30, 2024. The trading profit fell by 11% to 2.10 billion rand (2023: 2.30 billion rand), reflecting a challenging market environment marked by intense competition and deflationary pricing pressures.
Founded in 1969, Italtile Limited operates through a network of 208 stores, including six online webstores, under retail brands such as CTM, Italtile Retail, and TopT. The company's vertically integrated supply chain supports its retail operations with key manufacturers and extensive import operations. Despite a volatile trading environment, the company managed to recover market share in the second half of the year, aided by a focus on operational excellence and cost reduction.
The trading environment during the review period was characterized by a cost of living crisis, low consumer demand, and volatile shipping costs. The emergence of new competitors in the tile manufacturing and retail sectors further intensified market competition. Southern African tile manufacturers resorted to predatory pricing tactics to penetrate the market, exacerbating price declines and impacting industry margins.
In the manufacturing division, Ceramic, a part of Italtile Limited, achieved improvements in manpower and product range but struggled to grow tile volumes and improve capacity utilization. The poor performance of Ceramic contributed to the decline in group profits reported in December, though the rate of decline slowed in the second half of the year.
According to information available from the Johannesburg Stock Exchange (JSE), the group's cash balance increased to 1.84 billion rand (2023: 1.05 billion rand). This strong cash generation allowed the declaration of a special dividend of 78.0 cents per share, reflecting the company's robust liquidity position.
The retail division made significant strides in growing TopT sales and enhancing online platform contributions. While CTM faced financial pressure from mass-middle market customers, improvements in agility and competitiveness were noted. The East Africa node, however, delivered disappointing results, prompting a cautious approach to further expansion in the region.
In manufacturing, Ezee Tile realized cost and efficiency benefits from its new flagship facility, resulting in double-digit sales and profit growth. Ceramic's performance improved through remedial measures, including management restructuring and product enhancement. However, sales in the division declined due to deteriorating trading conditions and excess capacity in Southern Africa.
The group declared a final gross ordinary cash dividend of 22.0 cents per share, along with a gross special cash dividend of 78.0 cents per share. The Board assured shareholders that the group would meet the solvency and liquidity requirements following the distribution.
Looking ahead, Italtile Limited aims to open five new TopT stores and further optimize its digital experience to grow webstore sales. The manufacturing division will focus on market share growth and cost reduction to offset market price deflation. Securing a sustainable energy supply remains a key priority for Ceramic, with plans to explore alternative energy sources.
Despite the challenging trading environment, Italtile Limited remains optimistic about growth prospects, citing favorable housing market dynamics and potential economic improvements. The company is committed to leveraging its assets, including motivated teams, iconic brands, and a vertically integrated supply chain, to enhance competitiveness and achieve its strategic objectives.
Provided by SyndiGate Media Inc. (Syndigate.info).Demikianlah Artikel Italtile Limited Announces 11% Decline in Trading Profit Amidst Competitive Market
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