Italtile expects earnings for the year to end-June to be flat to slightly higher, as a slump in manufacturing sales and subdued demand in the building sector weigh on performance.
In a voluntary trading update on Monday, the group said headline earnings per share (HEPS) were forecast to increase by 0.1%- 5.2% to between 123.1c and 129.4c compared with a year ago.
The retail division, comprising CTM, Italtile Retail and TopT, managed to grow sales and maintain market share despite muted consumer spending. Like-for-like sales were slightly higher, supported by stable pricing.
Italtile said the manufacturing division came under pressure from excess capacity in the tile industry, leading to a sales decline, though Ezee Tile achieved growth. Selling prices in manufacturing edged lower.
In its integrated supply chain, import businesses posted weaker sales, reflecting muted demand and price deflation.
The group’s gross margin held steady as it focused on keeping products affordable and defending market share in a competitive environment.
“In the year ended 30 June intense competition, over-capacity and subdued demand exerted pressure on tile manufacturers. The SA economy remained muted with almost no GDP growth, resulting in depressed consumer confidence and low spend in the building and construction sector. Consumers remain price-conscious and constrained by tight budgets while searching for trusted quality and good value,” the group said.
Italtile expects trading conditions to remain challenging in the short to medium term as oversupply and weak demand persist.
Results for full-year will be released on August 25.
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