Natuzzi profits and sales slump on strong Euro gains
The Italian furniture giant Natuzzi has posted a 14.1% slump in quarterly net sales, citing the increased strength of the euro plus rising price competition from low cost production centres.
For the quarter ended March 31 2003, net sales of all furniture came in at Eur183.5 million compared with Eur213.6 million the year before. Leather-upholstered furniture sales fared even worse, falling 18.4% on the year previous to Eur133.0 million.
Sales in the Americas fell 18.8% to Eur79.2 million while a 13.3% decline was seen in European sales to Eur76.7 million, as weak end-user demand and depressed consumer confidence took their toll.
As a result, net profits were down 41.5% to Eur14.8 million. Pasquale Natuzzi, chairman and chief executive officer, added, "Current market conditions continue to negatively impact orders. The order flow is almost 5% lower than the same period last year, while the backlog is 5.4 weeks. The Natuzzi brand is affected by price competition never seen before in the marketplace driven by competitors based in countries with low cost production facilities.
"For this reason we are continuing to invest in brand related marketing activities with the goal of positioning Natuzzi in the medium-high end of the upholstery market. At the same time we support the growth of Italsofa as a solid competitor in the low-end market."
“Given these factors, the continuing strengthening of the Euro and the difficult forecast conditions, both short- and long-term, we do not expect full year results to improve over the level we had in the first quarter."
