Africa-Press – South-Africa. SA’s biggest retailer of bathroom tiles, Italtile, says profits slipped in its half-year to end-December, as the Covid-19 inspired home improvement boom continued to wane, along with an erosion of consumer spending power due to rising interest rates and elevated inflation.
System-wide turnover rose 3% to R6.2 billion to end December, it announced on Monday, while trading profit fell 8% to R1.4 billion, amid a 7% rise in selling prices, but an 8% fall in volumes.
Founded in 1969 and valued at R18.5 billion on the JSE, Italtile’s retail brands are CTM, Italtile Retail, TopT and U-Light, selling through a total network of 214 stores, including six online webstores.
The group said “onerous” increases in basic living costs, including food and transport, had a particularly severe impact on TopT’s market segment, much of which is dependent on social relief of distress grants and heavily impacted by fuel and food inflation.
However, CTM, which targets the middle market, was also under pressure with high levels of inventory across the industry prompting price cuts as retailers fought for market share, it said, along with general pressure on consumer spending.
Weaker demand, steep inflationary costs and production inefficiencies impacted adversely on the manufacturing operations of Ceramic and Ezee Tile as well.
“We anticipate that projected interest rate hikes and prevailing challenging economic conditions will intensify financial hardship and pressure on disposable income for homeowners, and subdued demand and investor confidence is likely to persist in the short term,” the group said.
“Given continued volatility in the global environment and instability in the local economy, more specific guidance regarding future performance would be ill-advised,” the statement read.
Itatltile cut its interim dividend by 6% to 32c per share, and in morning trade on Monday its shares were unchanged at R14.
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