Italtile plans to open more stores despite weak trading conditions

JSE-LISTED supplier of ceramic tiles Italtile said yesterday it planned to open more stores in South Africa and abroad, despite the subdued economy, which has constrained consumer spending.

Chief executive Jan Potgieter said the group would target Botswana and Kenya as it moved to increase its footprint across the continent.

“We are going to open stores across all of our brands, and we are also targeting countries like Botswana and Kenya as we increase our footprints across the continent,” he said.

Potgieter said the group maintained a strong balance sheet, despite the weak trading conditions, with the cash balance increasing 77 percent in the year to the end of June.

“We also experienced some cash outflows by investing in our business, but despite these material cash outflows, the group’s cash balance rose to R1.2 billion compared to R679 million reported last year,” Potgieter said.

The news sent the share price up, rising 13 percent in early trade on the JSE yesterday as the group said it planned to pay a special dividend of 50 cents a share despite the single-digit growth in earnings during the period.

Italtile said it would also declare a final ordinary dividend of 19 cents a share, to take the total issued up 8 percent to 41c from last year’s 38c.

Italtile’s retail brands include CTM, Italtile Retail and TopT. It has a network of 189 stores and five online stores.

Italtile reported a 15.2 percent increase in total system-wide turnover to R10bn, with total retail store turnover increasing by 6.1 percent, while like-on-like retail store turnover increased by 4.2 percent.

Manufacturing sales increased by only 1.4 percent.

Its trading profit increased by 18.4 percent to R1.80bn, with average selling price inflation estimated at 2.7 percent in the retail operation and 3 percent in the manufacturing operation.

The group also reported an 8 percent increase in basic earnings per share to 102.6c, while headline earnings per share increased by 7.2 percent to 101.8c.

In February, Italtile posted double-digit growth in earnings for the six months to the end of December, despite subdued consumer spending and high unemployment.

The manufacturer, franchisor and retailer of tiles, bathroom-ware and related products reported a 35 percent increase in trading profit to R968m, up from R716m last year. Yesterday, Potgieter said despite a very testing operating environment, Italtile remained optimistic that factors within its control would provide prospects for growth.

He said the group spent R622m in capital expenditure during the period.

Yesterday, the share rose to R14.49 from Wednesday’s close of R12.50. It shed some of the gains in the afternoon to trade around R13.70 before closing 8 percent higher at R13.50.