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Italtile - voluntary sales update
The global and South African macro-economic challenges have persisted into the new financial year. The market has continued to experience pressure from low priced imports causing a decline in revenue at Ceramic Industries (Pty) Ltd. ("Ceramic Industries").
In Retail, we have been encouraged by some green shoots in the project market. While retail tile volumes have increased as we have gained market share, average selling prices have continued to decrease compared to the Prior period. Competition remains rife and poor consumer confidence has resulted in continued margin pressure on tile products.
The Group welcomes the reduction in interest rates, but disappointingly low GDP growth has diminished any favourable impact and there is little sign of improvement in the building industry activity.
Sales perfomance
System-wide retail turnover reported by our brands, CTM, Italtile Retail and TopT, rose by 1,2% compared to the Prior period.
In the integrated supply chain businesses, Retail has been destocking and sales from these businesses were lower due to less seaborne imports.
Combined manufacturing sales reported by Ceramic Industries and Ezee Tile Adhesive Manufacturers (Pty) Ltd. to both Group and third-party customers declined by 6,2% compared to the Prior period.
Capacity utilisation reduced slightly year-on-year at Ceramic Industries. While internal efficiencies have improved, margins remain under pressure as a result of predatory pricing.
Company outlook
The challenging global and South African macro-economic environment is expected to continue for the rest of this financial year amid global uncertainty and geopolitical conflict. Intense competition will persist as a result of the imbalance between excess supply and weak demand, resulting in continued challenges in the trading environment.
The Group's sound assets, competent, engaged and motivated teams, robust iconic brands, industry- leading technology and products, and the competitive advantage of a vertically integrated supply chain position us well in the current environment and for any upturn in the future. It is our intention to remain a low-cost manufacturer and highly efficient in our supply and retail businesses.
The Group will continue to focus on retail excellence at every customer touchpoint, improving efficiencies and logistics, enhancing customer experience, and growing core competencies in sales and operating excellence.
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