Bathroomware company Italtile, which owns CTM and U-Light, has flagged a rise of about three-quarters in profit for its year to end-June, and expects its manufacturing interests to benefit in coming months as retailers rebuild in the wake of SA’s worst riots in decades.
More time at home, less spending on travel and entertainment, as well as low interest rates have all been cited as factors in strong sales growth for Italtile, which earned almost as much headline profit in its half-year to end-December than in the preceding full financial year.
In a trading update for the year ending June, Italtile said headline earnings per share (HEPS), the primary profit measure in SA, is expected to rise by between 74% and 81% — implying a rise of as much as R789m. This points to an even better second half than the first, as the group generated 77.1c in HEPS in its first half, while it expects final HEPS of at least 137.6c.
Italtile was also affected by the violence that gripped KwaZulu-Natal and Gauteng in July, saying on Thursday it had closed all 18 stores in KwaZulu-Natal for 10 days, and 16 other stores in other hotspots.
Italtile, founded in 1969 and valued at R21.8bn on the JSE, has about 200 stores targeting lower-middle to upper-end consumers.
Two TopT stores in Orange Farm and Spruitview in Gauteng were looted and destroyed, the group said, while numerous others were closed in July due to positive Covid-19 cases.
“There is no doubt this small number of damaged stores would have been substantially higher without the outstanding support received from our local communities and taxi associations, the SA Police Service and the SA National Defence Force, who were pivotal in protecting businesses in their neighbourhoods,” Italtile said.
The group said that until July 10 there was 14% sales growth, but the month ended with 5% growth.
“In terms of the widespread damage caused to most of the major retailers in the building industry, we expect the group’s subsidiary, Ceramic Industries, to experience some upside in sales over the next few months and possibly up to one year, as customers restock in the aftermath of the unrest,” said Italtile.
Italtile is a manufacturer and supplier of tiles, sanitary ware, bath ware, grout, adhesive, paint and related products, and this line of business contributed just more than a third of pretax profits in its 2020 year.
Small Talk Daily’s Anthony Clark said the results were “superb”, while the violence and looting should keep the group busy for some time.
The market for refurbishment remained buoyant, said Clark, adding there was pent-up demand that was also supporting prices
In afternoon trade on Thursday, Italtile’s shares were up 2.1% to R16.54, having risen just more than a quarter since the beginning of 2020.
Update: August 12 2021
This article has been updated with additional information.
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