Italtile predicts modest earnings growth amid challenging trading conditions

Italtile said ceramics market trading conditions have continued to deteriorate and it predicted only a marginal 0.1% to 5.2% increase in headline earnings per share (HEPS) for the financial year to June 30, 2025.

The manufacturer, distributor, and retailer of ceramic tiles, sanitaryware, and bathroom accessories said it expected HEPS to be between 123.1 cents and 129.4 cents, compared with 123 cents that was reported last year.

The group's directors said in a trading statement on Monday that intense competition, over-capacity, and subdued demand has exerted pressure on tile manufacturers. The South African economy showed almost no GDP growth, resulting in depressed consumer confidence and low spending in the building and construction sector.

“Consumers remain price-conscious and constrained by tight budgets while searching for trusted quality and good value,” Italtile’s directors said.

They said Italtile's “encouraging" performance in the first half, particularly in the second quarter, was due to positive sentiment and the injection of cash from the two-pot pension funds, but both of these factors stalled in the third quarter.

“The second half was more subdued overall, and the group's system-wide turnover decreased,” they said.

Italtile’s retail division - its shop brands are CTM, Italtile Retail, and TopT - reported full-year results that were 2% higher than the prior year, and market share was maintained. Full-year like-on-like sales increased 1%, with average selling price inflation of 0.2%.

Trading conditions in the ceramics market weakened mainly due to excess manufacturing capacity in the industry. This resulted in a 5% overall manufacturing division sales decline despite Ezee Tile's 4% growth in sales. Average manufacturing selling price deflation was 1.6%.

The import businesses, International Tap Distributors, Cedar Point, and Distribution Centre, collectively reported a decrease in sales value of 3%, with average selling price deflation of 0.9%.

The group's consolidated gross margin remained flat in line with efforts to support affordability for customers and compete for market share.

The directors said they expect the trading environment to remain challenging in the short to medium term as intense competition persists due to the imbalance between excess supply and weak demand.

“We expect continued headwinds to subdue growth, margins, and profitability in the year ahead. We believe a rigid focus on the controllable aspects of our business will position us to capitalise on opportunities when the trading environment improves,” they said.

The share price gained 0.2% on the JSE to R9.62 on Monday afternoon, this after the price has fallen steadily from over R14.37 in December.

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