Natuzzi (NTZ) Q3 2024 earnings summary

Executive summary

• Sales for the first nine months of 2024 were €243.9 million, nearly flat year-over-year, outperforming sector peers facing declines.

• Branded business sales grew 6.3% year-over-year and 20.8% since 2019, now representing 93% of total sales, with strong U.S. growth.

• Significant restructuring included a reduction of 538 employees and €4.8 million in one-off severance costs.

• Retail transformation and digitalization initiatives advanced, with new store concepts and IT tools rolled out across the network.

• Operating loss was €3.6 million; excluding one-offs, operating profit would be €1.2 million.

Financial highlights

• Gross margin for the first nine months was 35.8%, flat year-over-year; adjusted for severance, it would have been 37.4%.

• Net loss after tax for the nine months was €11.5 million, compared to €6.4 million in 2023.

• Financial costs rose to €7.4 million from €5.6 million last year, mainly due to higher interest rates and unfavorable currency movements.

• Cash position declined from €33.6 million to €17.1 million, with €5.1 million used in operations, €5.4 million in investments, and €7.1 million in financing activities.

• Net financial position before lease liabilities deteriorated to (€28.7) million from (€6.6) million at year-end.

Outlook and guidance

• Recent weeks have shown improved order flow, but management remains cautious due to ongoing market volatility.

• The move of production from Shanghai to Quzhou/Quanjiao is expected to yield 2-3% gross margin improvement in 2025 and reduce costs by about 30%.

• The new contract division is expected to deliver incremental, margin-accretive business, targeting €10–20 million at steady state.

• Break-even has been lowered to around €75–80 million in quarterly revenue, with higher incremental profitability above this level.

• Proceeds from non-strategic asset sales will fund restructuring and DOS network expansion.