Wrap Text
Reviewed Interim Financial Statements and Cash Dividend Declaration for the six months ended 31 December 2024
Italtile Limited
Incorporated in the Republic of South Africa.
(Registration number: 1955/000558/06)
Share code: ITE
ISIN: ZAE000099123
("Italtile" or "the Group")
REVIEWED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AND CASH DIVIDEND DECLARATION
FOR THE SIX MONTHS ENDED 31 DECEMBER 2024
HIGHLIGHTS
- System-wide turnover down 1% to R6,1 billion
2023: R6,1 billion
- Ordinary dividend per share up 4% to 28,0 cents
2023: 27,0 cents
- Headline earnings per share up 4% to 70,1 cents
2023: 67,2 cents
- Net cash up 9% to R1,6 billion
2023: R1,5 billion
- Earnings per share up 5% to 70,6 cents
2023: 67,5 cents
- Store network up 1% to 211
June 2024: 208; December 2023: 214
- Trading profit up 3% to R1,2 billion
2023: R1,1 billion
- Net asset value per share down 1% to 678,1 cents
2023: 684,4 cents
At the year-end, we committed to our 'fighting-fit' mantra, which stood us in good stead for
the Review Period. Our operators once again displayed their perseverance and resilience.
Our stores are profitable and the franchise network is healthy. Our vertically integrated
manufacturing and import businesses underpinned the retail operations' value offering for
cost-conscious customers. Our continued efforts to instil retail excellence disciplines
were rewarded by our customers' loyalty to our brands and their approval of our shopping
experience. We are gratified to report that the six months under review ended stronger than
it started, buoyed by improved consumer sentiment and increased disposable income.
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 211 stores,
including seven 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
The six-month reporting period was characterised by two distinct halves. In the first half ("Q1"),
consumer confidence and spend in the building and construction sector remained subdued in the context
of high interest rates and inflation, which restricted disposable income and discretionary investment,
and impacted on the affordability of renovation and new build projects.
In the second half ("Q2"), consumer sentiment and confidence turned more positive subsequent to the
successful and peaceful transition to the Government of National Unity ("GNU"), while homeowners'
disposable income increased as a result of two interest rate cuts, generally lower inflation levels
and payouts released by the two-pot pension fund reforms. Albeit that the full effect of these economic
stimulus measures will take time to filter through before significantly impacting on demand and spend,
there was a notable uptick in Group sales in the latter part of the Review Period. While this is
encouraging, management is cautious regarding the sustainability of this positive trend, particularly
since the impact of the once-off cash injection provided by the two-pot retirement funds has started to
diminish.
GROUP PERFORMANCE
A stronger performance in Q2 buoyed the Group's results for the Review Period. The improvement was
underpinned by a combination of external and internal factors. Externally, we benefited from the
uptick in consumer sentiment and spend in the latter half of the period, a trend also reported on
by other retailers. Internally, improvements were made across the business. While further work
remains to be done in terms of continuing to execute better on our retail excellence disciplines,
we are satisfied that we made good progress on improving in-store presentation, market awareness
of our value offerings and capitalised on opportunities that we had identified.
Quality and affordability are our customers' primary watchwords, and we strive to add value through
key points of differentiation, including our innovative fashionable products at various price ranges;
trusted quality; stock availability; meaningful warranties; and product service experts. Our value
proposition is underpinned by the Group's buying prowess, synergies in our integrated supply chain
and our marketing initiatives designed to ensure our brands are top of mind at all times, and
effectively communicate our 'Every Day Low Prices' positioning through CTM and TopT's offerings of
"Big Savings. More Style" and "Every price a low price."
In the Retail division, TopT delivered another consecutive set of good results, while CTM showed
early signs of turning around its recent disappointing results. The East Africa region also improved
its performance in the period, after the challenging prior six months. Our webstore offering grew
traffic and sales, a pleasing achievement.
In the Manufacturing division, Ezee Tile delivered another solid performance, albeit off a low base, and
its flagship Vulcania factory is now operating close to design specification. Although Ceramic Industries'
Q2 results were markedly stronger than Q1, results for the Review Period declined against the prior comparable
period, as selling prices remained under pressure and production cost reductions only filtered into the business
toward the end of Q2. While the Tile division reported slightly weaker results for the six months compared to
the prior corresponding period, given the excess capacity in the market and prevailing price wars, the business
did well to retain market share. The Sanitaryware division grew its key metrics, however, there are further
opportunities to improve internal efficiencies.
Good progress was also made in improving the competence and strength of our human capital support
function to facilitate our ambitious growth targets. We restructured and recapacitated the Group's
Human Capital division aimed at enhancing our capability to recruit, retain, train and develop
suitably skilled and competent individuals aligned with the Group's high-performance culture.
Initial results from this intervention have been positive and we are optimistic that this
transformation will afford the business significant benefit in the longer term.
KEY FOCUS AREAS
Retail
We will aim for continued improvement in the execution of retail excellence disciplines in our
stores and opportunities exist for each of our brands to grow and gain market share in the second half
of the current financial year should the external environment remain favourable in terms of consumer
sentiment and spend.
TopT plans to roll out three new stores in the second half of the financial year and will benefit from
sales from the four new and relocated stores opened in the Review Period. We will also continue to drive
simplification of store operations to assist operators to improve execution at key touchpoints.
We will strive to build on the momentum gained by CTM during the reporting period by continuing to
differentiate the brand as an icon of affordable fashion, through price, quality and service. The
sustained turnaround of the business will be achieved through exceptional performance at all key customer
touchpoints, underpinned by building our competencies and capability in this business - and is dependent
on continued momentum in the retail industry. Strengthening our operators and operations teams is an
ongoing process - and we will escalate our investment in this regard in the period ahead. Our new customer
experience programme will provide a solid benchmark for setting CTM apart from its competitors.
Italtile Retail's unrivalled leadership in home décor fashion trends will continue to entice exclusive
residential customers, while the Commercial Projects division has opportunity to develop and expand its
presence in the development market through innovative, high-quality products.
Margins in the Retail division are expected to remain under pressure in the competitive environment.
Cost leadership will be key, together with ensuring an optimal product mix and tactical price ladders.
Manufacturing
Substantial efficiencies and synergies have been extracted at Ezee Tile's new flagship Vulcania plant,
and the business will continue to grow through driving a gain in market share. Developing new products
and identifying viable market niches will be a key consideration and the specifications and projects
segments will be targeted. The entity acquired a sand quarry in the preceding six months, which has
secured long-term supply to the Vulcania plant. There are opportunities to improve efficiencies at this
site to increase supply to the plant and other markets.
In the deflationary pricing environment for ceramic tiles, Ceramic's margins will remain under pressure.
In the period ahead, management will focus on driving growth through reducing costs further, optimising
capacity utilisation and enhancing operating efficiencies to recover margins, including improving yields
and reducing waste.
Our goal is to grow market share through the introduction of products to substitute imports, including
for the commercial projects segment. Planned installation of new technology at our Vitro factory will
increase capacity utilisation and improve our competitive advantage in the sought-after rectified tile
market.
Securing a sustainable, viably priced alternative to Sasol's piped natural gas supply from Mozambique
will remain a key priority for management. The engineering design and costing for our coal-gas trial
project has been completed, however, given the extension of Sasol gas supply to June 2028, implementation
of this project has been delayed while we continue to explore proposals currently being developed by
providers of other alternative energy solutions.
General
Developing our leadership pipeline and optimising our human capital resource will remain of vital
importance to achieving the Group's ambitious growth targets through our customer-centric culture.
Substantial investment has been made in restructuring and recapacitating our Human Capital division,
and we are optimistic that recent appointments made at Ceramic by the new team will have positive
results on the performance of that business.
OUTLOOK
The improved consumer confidence and trading conditions experienced during the last three months of
the Review Period are tenuous and may not be sustained, as we do not expect further benefit from the
released two-pot pension funds, and we remain generally concerned about global trading uncertainties.
Further interest rate cuts and lower inflation could start to impact positively on disposable income
in the home improvement sector, however, consumer spend remains constrained.
Although the high cost of living will continue to weigh on South Africans, experience has proved that
local homeowners prioritise their homes as their primary asset and invest in them when funds permit.
We expect this trend to persist, albeit that spend will be restrained.
Operationally, the trading environment will remain very challenging while supply continues to exceed
demand and distressed competitors resort to increasingly predatory tactics. Margins will remain tight
and our priority will be to drive efficiencies hard in the business.
In the two months subsequent to the Review Period, our Retail and Import Supply Chain businesses
delivered revenue in line with the prior comparable period (H2 2024), however, the Manufacturing
division's turnover was weaker.
In the longer-term, prospects for growth in the sector are relatively positive. South Africa is
under-housed and the dynamics of the housing market are favourable, featuring a young, growing,
upwardly mobile population with a strong aspiration to own a home.
Our frequently stated intent is to focus on the growth levers within our control. While we are
hopeful that interest rates and inflation will decline further and the economy will be strengthened
through structural reforms and increased investment, our strategy is to realise the opportunities
within our business. We will do this by improving our competitiveness at all touchpoints, namely
our iconic brands, leading-edge technology and products, vertically integrated supply chain, and
resilient, capable teams and franchise partners.
27 February 2025
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 117) for the Review Period ended
31 December 2024 of 28,0 cents per share (2023: 27,0 cents) out of income reserves to all shareholders
of Italtile as at the record date of Friday, 28 March 2025. The dividend per share is calculated based
on 1 321 654 148 shares (2023: 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
22,4 cents per share for shareholders liable to pay dividends tax and 28,0 cents per share for
shareholders exempt from paying dividends tax.
Italtile's income tax reference number is 9050182717.
Dividend declaration date Monday, 3 March 2025
Last day to trade cum the dividend Tuesday, 25 March 2025
Date to commence trading ex-dividend Wednesday, 26 March 2025
Record date Friday, 28 March 2025
Payment date Monday, 31 March 2025
Share certificates may not be rematerialised or dematerialised between Wednesday, 26 March 2025
and Friday, 28 March 2025, both days inclusive.
RESULTS ANNOUNCEMENT
The content of this results announcement is the responsibility of the Board. Shareholders are
advised that this announcement represents a summary of the information contained in the full
announcement which has been released on SENS and is available on the JSE cloudlink at:
https://senspdf.jse.co.za/documents/2025/jse/isse/ite/interims25.pdf and on Italtile's website
at https://italtile.com/sens-announcements.php. This results announcement was published on SENS
on Monday, 3 March 2025.
The reviewed condensed consolidated interim financial statements for the six months ended
31 December 2024 ("Results") were reviewed by PricewaterhouseCoopers Inc. ("PwC"), who
expressed an unmodified review conclusion thereon. Shareholders are advised that 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://italtile.com/reports-and-results.php or from the Company Secretary
who is contactable on +27 11 325 6363 or roxanne@acorim.co.za.
Any investment decisions made by investors and/or shareholders should be based on a consideration
of the Results as a whole and investors and shareholders are encouraged to review the Results,
as detailed herein.
Registered office: The Italtile Building, 72 Peter Place, Bryanston, 2191, Gauteng, South Africa
Postal address: PO Box 1689, Randburg, 2125, South Africa
Transfer secretaries: Computershare Investor Services Proprietary Limited
Company Secretary: Acorim Proprietary Limited
Sponsor: Merchantec Capital
Auditor: PricewaterhouseCoopers Inc.
www.italtile.com
Date: 03-03-2025 07:15:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
