Natuzzi: Positive Group Performance Continues

SANTERAMO IN COLLE, Bari, Italy--(BUSINESS WIRE)--

The Board of Directors of Natuzzi S.p.A. NTZ discussed Q3 2015 and 9M 2015 consolidated results (unaudited).

Following the Board meeting, the Chairman and CEO Pasquale Natuzzi stated:

"The positive results posted for the preceding six quarters have once again been replicated in the third quarter of 2015.

The improved sales mix and quality - together with favorable currency movements – led to a 3.1% revenue increase (+10.6% for the first nine months) and a significant margin boost.

In Q3 2015, the Natuzzi brand represented 70.5% of upholstery sales, with the remaining 29,5% from Private Labels. The regional breakdown highlights the strong performances of the Americas (+10.5%) and Asia Pacific (+9.0%) - in particular China and South Korea.
In the EMEA region, it is worth to highlight a double digit growth in UK that become the second largest market for Natuzzi after the United States.

Under the retail strategy, since the beginning of the year 90 new Galleries have been opened and 15 new sales points – among which Hong Kong, Beijing, Rio de Janeiro and Naples (USA).

Together with the improved performance of the 56 DOS currently operational worldwide, the Group completed the chain restructuring with the closure of 9 unprofitable sales points in Italy, Spain and China.

Significant Private Label sales growth was reported in the EMEA region (+56.4%).

The cost of sales as a percentage of net sales reduced 4.8% (-3.7% in the nine months) thanks to the efficiency measures introduced at the Chinese plant and greater productivity at the Italian plant, the stabilization of the workforce and the discontinuation of worker rotation from May 2015 as per the Trade Union Agreement of March 3, 2015.

These factors contributed to the posting of an EBITDA of Euro 1.5 million for the quarter compared to an EBITDA loss of Euro 3.7 million in Q3 2014. (loss of Euro 0.8 million in 9M 2015).

The continuous improvement of the key indicators over the last six quarters is highlighted below:

		1Q 2014		2Q 2014		3Q 2014		4Q 2014		1Q 2015		2Q 2015		3Q2015
Total Net Sales*		-11.2%		-1.2%		+8.2%		+12.6%		+24.6%		+5,7%		+3.1%
COGS**		-71.5%		-74.2%		-72.1%		-71.2%		-70.6%		-69.0%		-67.3%
Other SG&A**		-21.8%		-20.9%		-18.2%		-17.7%		-17.3%		-18%		-17.3%
EBITDA**		-6.0%		-7.1%		-3.3%		-3.7%		-1.2%		-0.8%		+1.3%

* change in quarterly sales on corresponding quarters of the previous years

** percentage of net sales

Further product innovations stemming from the adoption of the new Moving Line manufacturing process: in the third quarter of 2015, the Matera facility - which is implementing on an industrial scale the innovations tested at the Experimental Laboratory - saw a significant lowering of industrial costs in comparison to the general average for the Italian facilities.

About Natuzzi S.p.A.

Founded in 1959 by Pasquale Natuzzi, Natuzzi S.p.A. designs, manufactures and sells a broad collection of couches, armchairs, home furniture and home accessories. With consolidated revenues of €461.4 million in 2014, Natuzzi is Italy's largest furniture house and the player with the greatest global reach in its sector, with eight manufacturing plants, twelve commercial offices and more than 1,100 points of sale worldwide. Ethics and social responsibility, innovation, industrial know-how and integrated management of its value chain represent the points of strength that have made the Natuzzi Group a market leader and established Natuzzi as the most recognized furniture brand in the world among consumers of luxury goods. Natuzzi S.p.A. has been listed on the New York Stock Exchange since May 1993. The Company is ISO 9001 and 14001 certified.

Natuzzi S.p.A. and Subsidiaries
Unaudited Consolidated Profit & Loss for the third quarter 2015 & 2014 on the basis of Italian GAAP
(expressed in millions Euro)
		Three months ended on				Change		Percentage of Sales
		30-Sep-15		30-Sep-14		%		30-Sep-15		30-Sep-14
Upholstery net sales		104,4		100,1		4,4%		90,7%		89,6%
Other sales		10,7		11,6		-7,9%		9,3%		10,4%
Total Net Sales		115,1		111,7		3,1%		100,0%		100,0%
Consumption (*)		(53,5)		(52,6)		1,7%		-46,5%		-47,1%
Labor		(16,7)		(20,4)		-18,0%		-14,5%		-18,3%
Industrial Costs		(7,3)		(7,5)		-3,0%		-6,3%		-6,7%
of which: Depreciation, Amortization		(2,5)		(2,9)		-16,1%		-2,1%		-2,6%
Cost of Sales		(77,5)		(80,6)		-3,8%		-67,3%		-72,1%
Industrial Margin		37,6		31,1		20,8%		32,7%		27,9%
Selling Expenses		(19,6)		(18,6)		5,5%		-17,0%		-16,7%
Transportation		(12,5)		(12,5)		0,5%		-10,9%		-11,2%
Commissions		(2,2)		(2,2)		-0,9%		-1,9%		-2,0%
Advertising		(4,9)		(3,9)		25,5%		-4,3%		-3,5%
Other Selling and G&A		(19,9)		(20,4)		-2,4%		-17,3%		-18,2%
of which: Depreciation, Amortization		(1,0)		(1,2)		-22,4%		-0,8%		-1,1%
EBITDA		1,5		(3,7)				1,3%		-3,3%
EBIT		(1,9)		(7,8)				-1,7%		-7,0%
Interest Income/(Costs), Net		(1,2)		(0,5)
Foreign Exchange, Net		(1,0)		(1,5)
Other Income/(Cost), Net		(0,2)		0,9
Earning before Income Taxes		(4,3)		(9,0)				-3,7%		-8,1%
Current taxes		(0,8)		(0,4)				-0,7%		-0,4%
Net Result		(5,1)		(9,4)				-4,4%		-8,4%
Minority interest		0,0		(0,0)
Net Group Result		(5,1)		(9,4)				-4,4%		-8,4%
(*) Purchases plus beginning stock minus final stock and leather processing

		UPHOLSTERY NET SALES BREAKDOWN
		GEOGRAPHIC BREAKDOWN
		NET SALES (in €, million)										NET SALES (in seats sold)
AREA		3Q 2015		%		3Q 2014		%		delta		3Q 2015		%		3Q 2014		%		delta
Americas		45,2		43,3%		43,4		43,4%		4,1%		182.177		48,5%		207.517		52,4%		-12,2%
Natuzzi		28,8		27,6%		26,0		26,0%		10,5%		96.546,1		25,7%		100.201,6		25,3%		-3,6%
Private label		16,4		15,7%		17,4		17,3%		-5,5%		85.631,0		22,8%		107.315,5		27,1%		-20,2%
EMEA		41,8		40,1%		42,1		42,1%		-0,6%		147.397		39,2%		143.703		36,3%		2,6%
Natuzzi		29,3		28,1%		34,1		34,1%		-13,9%		80.532,1		21,4%		96.495,4		24,3%		-16,5%
Private label		12,5		12,0%		8,0		8,0%		56,4%		66.864,6		17,8%		47.207,5		11,9%		41,6%
Asia-Pacific		17,4		16,7%		14,6		14,6%		19,4%		46.033		12,3%		45.161		11,4%		1,9%
Natuzzi		15,5		14,8%		14,2		14,2%		9,0%		35.215,0		9,4%		42.626,8		10,8%		-17,4%
Private label		1,9		1,8%		0,4		0,4%		422,1%		10.818,0		2,9%		2.534,0		0,6%		326,9%
TOTAL		104,4		100,0%		100,1		100,0%		4,4%		375.607		100,0%		396.381		100,0%		-5,2%
		BREAKDOWN BY BRAND
		NET SALES (in €, million)										NET SALES (in seats sold)
BRAND		3Q 2015		%		3Q 2014		%		delta		3Q 2015		%		3Q 2014		%		delta
Natuzzi		73,6		70,5%		74,3		74,3%		-1,0%		212.293		56,5%		239.324		60,4%		-11,3%
Private label		30,8		29,5%		25,7		25,7%		19,8%		163.314		43,5%		157.057		39,6%		4,0%
TOTAL		104,4		100,0%		100,1		100,0%		4,4%		375.607		100,0%		396.381		100,0%		-5,2%
The "Natuzzi" brand includes the Group's three lines of product: Natuzzi Italia, Natuzzi Editions and Natuzi Re-Vive

Natuzzi S.p.A. and Subsidiaries
Unaudited Consolidated Profit & Loss for the nine months of 2015 & 2014 on the basis of Italian GAAP
(expressed in millions Euro)
		Nine months ended on				Change		Percentage of Sales
		30-Sep-15		30-Sep-14		%		30-Sep-15		30-Sep-14
Upholstery net sales		320,6		288,3		11,2%		89,9%		89,3%
Other sales		36,2		34,5		5,0%		10,1%		10,7%
Total Net Sales		356,8		322,8		10,6%		100,0%		100,0%
Consumption (*)		(166,9)		(149,2)		11,9%		-46,8%		-46,2%
Labor		(56,7)		(64,4)		-12,0%		-15,9%		-20,0%
Industrial Costs		(22,8)		(20,9)		8,7%		-6,4%		-6,5%
of which: Depreciation, Amortization		(7,5)		(7,4)		0,9%		-2,1%		-2,3%
Cost of Sales		(246,3)		(234,5)		5,0%		-69,0%		-72,7%
Industrial Margin		110,5		88,3		25,2%		31,0%		27,3%
Selling Expenses		(59,2)		(51,1)		15,8%		-16,6%		-15,8%
Transportation		(39,1)		(33,7)		16,1%		-11,0%		-10,4%
Commissions		(7,2)		(6,7)		8,7%		-2,0%		-2,1%
Advertising		(12,8)		(10,8)		19,2%		-3,6%		-3,3%
Other Selling and G&A		(62,6)		(65,4)		-4,2%		-17,5%		-20,3%
of which: Depreciation, Amortization		(2,9)		(3,2)		-9,1%		-0,8%		-1,0%
EBITDA		(0,8)		(17,6)				-0,2%		-5,5%
EBIT		(11,3)		(28,3)				-3,2%		-8,8%
Interest Income/(Costs), Net		(2,3)		(1,0)
Foreign Exchange, Net		(3,0)		(0,4)
Other Income/(Cost), Net		(0,7)		(3,0)
Earning before Income Taxes		(17,2)		(32,7)				-4,8%		-10,1%
Current taxes		(1,1)		(1,2)				-0,3%		-0,4%
Net result		(18,3)		(33,9)				-5,1%		-10,5%
Minority interest		(0,0)		(0,0)
Net Group Result		(18,3)		(33,9)				-5,1%		-10,5%
(*) Purchases plus beginning stock minus final stock and leather processing

		UPHOLSTERY NET SALES BREAKDOWN
		GEOGRAPHIC BREAKDOWN
		NET SALES (in €, million)										NET SALES (in seats sold)
		Nine months ended on										Nine months ended on
AREA		30-Sep-15		%		30-Sep-14		%		delta		30-Sep-15		%		30-Sep-14		%		delta
Americas		133,5		41,70%		116,4		40,40%		14,70%		529.440		46,70%		576.076		48,90%		-8,10%
Natuzzi		80,6		25,10%		69,1		24,00%		16,50%		262.240		23,10%		273.703		23,30%		-4,20%
Private label		53		16,50%		47,3		16,40%		12,10%		267.201		23,50%		302.373		25,70%		-11,60%
EMEA		141,8		44,20%		134,6		46,70%		5,30%		491.709		43,30%		474.302		40,30%		3,70%
Natuzzi		101,9		31,80%		108		37,50%		-5,60%		276.231		24,30%		308.387		26,20%		-10,40%
Private label		39,9		12,40%		26,7		9,20%		49,70%		215.479		19,00%		165.915		14,10%		29,90%
Asia-Pacific		45,2		14,10%		37,2		12,90%		21,60%		113.467		10,00%		126.691		10,80%		-10,40%
Natuzzi		41,6		13,00%		35,5		12,30%		17,10%		93.894		8,30%		114.420		9,70%		-17,90%
Private label		3,6		1,10%		1,7		0,60%		117,60%		19.573		1,70%		12.271		1,00%		59,50%
TOTAL		320,6		100,00%		288,3		100,00%		11,20%		1.134.617		100,00%		1.177.069		100,00%		-3,60%
		BREAKDOWN BY BRAND
		NET SALES (in €, million)										NET SALES (in seats sold)
		Nine months ended on										Nine months ended on
BRAND		30-Sep-15		%		30-Sep-14		%		delta		30-Sep-15		%		30-Sep-14		%		Delta
Natuzzi		224,1		69,90%		212,7		73,80%		5,40%		632.364		55,70%		696.510		59,20%		-9,20%
Private label		96,5		30,10%		75,6		26,20%		27,70%		502.252		44,30%		480.559		40,80%		4,50%
TOTAL		320,6		100,00%		288,3		100,00%		11,20%		1.134.617		100,00%		1.177.069		100,00%		-3,60%
The "Natuzzi" brand includes the Group's three lines of product: Natuzzi Italia, Natuzzi Editions and Natuzi Re-Vive

Natuzzi S.p.A. and Subsidiaries
Unaudited Consolidated Balance Sheets at September 30, 2015 on the basis of Italian GAAP (Expressed in millions of Euro)
ASSETS		30-Sep-15		31-Dec-14
Current assets:
Cash and cash equivalents		40,6		32,8
Marketable debt securities		0,0		0,0
Trade receivables, net		61,9		96,0
Other receivables		23,0		18,1
Inventories		88,6		90,2
Unrealized foreign exchange gains		0,7		0,3
Prepaid expenses and accrued income		1,3		1,3
Deferred income taxes		0,5		0,5
Total current assets		216,7		239,3
Non-current assets:
Net property, plant and equipment		122,5		130,8
Other assets		8,1		10,0
Total non-current assets		130,6		140,8
TOTAL ASSETS		347,3		380,1
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings		16,7		20,7
Current portion of long-term debt		2,2		3,1
Accounts payable-trade		58,3		75,2
Accounts payable-other		26,8		29,7
Accounts payable-shareholders for dividends		0,0		0,0
Unrealized foreign exchange losses		0,1		0,6
Income taxes		0,9		1,1
Deferred income taxes		1,9		1,0
Salaries, wages and related liabilities		16,6		18,3
Total current liabilities		123,5		149,7
Long-term liabilities:
Employees' leaving entitlement		20,9		20,9
Long-term debt		13,3		6,2
Deferred income taxes - long term		0,0		0,0
Deferred income for capital grants		7,7		8,1
Other liabilities		19,5		21,2
Total long-term liabilities		61,4		56,3
Minority interest		3,2		3,0
Shareholders' equity:
Share capital		54,9		54,9
Reserves		4,3		40,9
Additional paid-in capital		0,0		8,4
Retained earnings		100,1		66,8
Total shareholders' equity		159,3		171,0
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		347,3		380,1

Natuzzi S.p.A. and Subsidiaries
Consolidated Statements of Cash Flows
		30-Sep-15		30-Sep-14
Cash flows from operating activities:
Net earnings (loss)		-18.333		-33.942
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		10.425		10.655
(Gain) loss on disposal of assets		15		84
Unrealized foreign exchange losses (gains)		-880		882
Deferred income for capital grants		-422		-346
Non monetary operating items		9.106		14.979
Change in assets and liabilities:
Receivables, net		34.080		-12.780
Inventories		1.580		-15.420
Prepaid expenses and accrued income		-4		553
Other assets		-3.959		19.094
Accounts payable		-17.317		-6.255
Income taxes		-197		-6.165
Salaries, wages and related liabilities		-91		7.240
Other liabilities		867		2.990
Net working capital		14.960		-10.744
Net cash generated/(used) by operating activities		5.732		-29.707
Cash flows from investing/restructuring activities:
Property, plant and equipment:
Additions		-1.798		-6.843
Disposals		3.392		6.866
One time termination benefits		-2.890		-2.563
Net cash generated/(used) by in investing activities		-1.296		-2.834
Cash flows from financing activities:
Long-term debt:
Proceeds		9.003		5.000
Repayments		-2.853		-2.620
Short-term borrowings		-4.015		-1.712
Dividends paid to minority interests
Net cash generated/(used) by financing activities		2.135		668
Effect of translation adjustments on cash		1.197		4.252
Increase (decrease) in cash and cash equivalents		7.769		-27.620
Cash and cash equivalents, beginning of the year		32.852		61.037
Cash and cash equivalents, end of the period		40.622		33.418

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