The company reported double-digit growth in its group-wide turnover and profits during the interim period.
Italtile has announced a strong interim performance for the half-year ended December 2020, reporting double-digit growth in key financial metrics, including group-wide turnover of R6.2 billion and a profit of R1.4 billion.
Italtile CFO Brandon Wood explains that the primary challenge in the industry over the reporting period was the acute impact of the pandemic on global and local supply chains. The adverse effect of operating restrictions imposed on international factories was exacerbated by extremely constrained and costly shipping supply, a situation aggravated in South Africa by severe delays and dysfunctionality at the national ports that resulted in imported products arriving infrequently, irregularly and at a higher cost.
The hard lockdown, which closed manufacturers for more than six weeks, also interrupted local supply in the short term. The result of this has been a period of volatility as operators struggled to navigate lengthy supply shortages followed by phases of oversupply.
However, Italtile enjoyed significant benefit from its local integrated supply chain and manufacturing capacity, which negated the challenges regarding stock availability and pricing instability. The group said that, within its supply chain or import business, it had grown sales by 25 percent.
Brandon adds that the group’s integrated supply chain with a significant manufacturing component also ensured that Italtile was well positioned from a stock holding position, “something many of our competitors, which rely significantly on imports, struggle with”.
He explains that contributing to the widespread stock shortage was higher than anticipated demand for home improvement products, which the enforced stay-at-home regulations boosted. But the company benefited from the work-from-home trend as people had the chance to focus on DIY and renovation projects because of more time and money saved on travel. There was also an increase in first-home buyers as property prices saw an all-time low.
“We undoubtedly benefited from an increased share of wallet as housebound consumers invested in the most significant asset: their homes,” says Brandon. “We are extremely fortunate to be in an industry which has, in fact, had a positive spin-off from Covid-19. Globally, consumers are spending more on their homes.”
The strong performance also saw the group’s dividend per share for the period increase 35 percent to 31 cents per share, compared with 23 cents per share for its 2019 interim results.
Brandon says that he is very proud of the response and contribution of Italtile’s people during these difficult times. “We are extremely pleased that they will partake in significant increased profit share, entrenching our culture of partnership throughout the organisation.”
