Securities and Exchange Commission
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant To Rule 13a-16 Or 15d-16
Of The
Securities Exchange Act of 1934
For the month of November 2005 Commission File Number 1-11854
NATUZZI S.p.A.
(Translation of Registrant's name into English)
Via Iazzitiello 47
70029 Santeramo, Italy
(Address of principal office)
(Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.)
(Check One) Form 20-F X Form 40-F
--- ---
(Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
(Check One) Yes No X
--- ---
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b).82__.)
Natuzzi Announces Third Quarter 2005 Financial Results
SANTERAMO IN COLLE, Bari, Italy--(BUSINESS WIRE)--Nov. 15,
2005--Natuzzi S.p.A. (NYSE: NTZ):
-- Net Sales Down by 11.1% at EUR 147.2 Million and Units Sold by
8.9% over the Third Quarter 2004
-- Net Losses of EUR 2.0 Million versus Net Earnings of EUR 5.6
Million Reported in Third Quarter 2004
-- Operating cash flow at EUR 16.9 million in the first nine
months of 2005
The Board of Directors of Natuzzi S.p.A. (NYSE: NTZ) ('Natuzzi' or
'the Company'), the world's leading manufacturer of
leather-upholstered furniture, today announced financial results for
the third quarter 2005.
NET SALES
Natuzzi third quarter 2005 net sales decreased by 11.1 percent to
EUR 147.2 million, or $ 179.5 million, as compared to third quarter
2004. During the same period total seats sold decreased by 8.9
percent.
For the first nine months of 2005, net sales were at EUR 479.4
million, or $ 605.4 million, down 14.4 percent from EUR 559.9 million,
or $ 686.2 million, reported for the same period last year, and total
seats sold decreased by 12.6% over the same comparable period.
During the third quarter 2005 net upholstery sales were at EUR
130.5 million, or $ 159.2 million, down by 11.3 percent over the same
period last year. Other sales (principally living-room accessories and
raw materials produced by the Company and sold to third parties)
decreased by 9.2 percent to EUR 16.7 million, or $ 20.4 million.
In the third quarter 2005 net sales in the Americas were at EUR
59.4 million, or $ 72.4 million, down by 14.2% from EUR 69.2 million,
or $ 84.6 million. In Europe sales were at EUR 61.2 million, or $ 74.6
million, down by 8.5 percent from EUR 66.9 million, or $ 81.8 million,
reported in the same quarter last year, and in the rest of the world
net sales were at EUR 9.9 million, or $ 12.1 million, down by 10.0
percent from EUR 11.0 million, or $ 13.4 million, of the previous year
comparable period.
In the quarter ended on September 30, 2005, total net sales to our
chains Divani & Divani by Natuzzi stores, Natuzzi stores, and Kingdom
of Leather stores were at EUR 24.4 million, or $ 29.8 million, down by
9.0 percent as compared to EUR 26.8 million, or $ 32.8 reported one
year ago. During the same quarter seven new stores were opened (2 in
France and one each in Italy, Arab Emirates, Australia, China and
Singapore), bringing the total number of stores to 284 as at September
30, 2005.
Leather-upholstered furniture sales decreased by 8.5 percent over
last year's third quarter to EUR 110.5 million, or $ 134.8 million,
and fabric-upholstered furniture by 24.2 percent to EUR 20.0 million,
or $ 24.4 million.
Net sales for the Natuzzi branded products during the third
quarter 2005 were at EUR 78.6 million, or $ 95.9 million, 29.4% down
with respect to the last year's comparable quarter, whereas, over the
same period, sales for the Italsofa products increased by 45.0 percent
to EUR 51.9 million, or $ 63.3 million.
Pasquale Natuzzi, Chairman and Chief Executive Officer, said: "The
general economic environment in which the Company has been dealing
with for the first nine months of 2005 was still difficult because of
unfavorable currency conditions, rising energy costs and price
deflation in the whole furnishing industry thus negatively affecting
our overall performance both in terms of sales and seats sold."
GROSS PROFIT & OPERATING INCOME
For the quarter ended September 30, 2005, Natuzzi's gross profit
was at EUR 48.6 million, or $ 59.3 million, down 15.6 percent from EUR
57.6 million, or $ 70.4 million, reported one year earlier. Gross
profit margin was at 33.0 percent from 34.8 percent recorded in last
year third quarter.
For the three months ended September 30, 2005 operating income was
nil, versus a net operating profit of EUR 6.7 million, or $8.2
million, reported in the third quarter of 2004.
FOREX & TAXES
In the three months ended on September 30, 2005 the Company had a
net foreign exchange loss of EUR 0.9 million, or a loss of $ 1.1
million, versus a net foreign exchange gain of EUR 1.8 million, or $
2.2 million, reported in last year's comparable period.
For the third quarter 2005 the Company had income taxes of EUR 0.5
million, or $ 0.6 million, versus EUR 1.8 million, or $ 2.2 million,
reported in third quarter 2004.
NET INCOME & EARNINGS PER SHARE
For the quarter ended on September 30, 2005, the Company reported
net losses of EUR 2.0 million, or net losses of $ 2.4 million, versus
net earnings of EUR 5.6 million, or $ 6.8 million, reported in the
same quarter of last year. Losses per share (ADR) were EUR 0.04, or $
0.05, versus EUR 0.10 earnings per share, or $ 0.12, reported in the
third quarter of 2004.
Considering the first three quarters of 2005 the Company recorded
net losses of EUR 13.9 million, or $ 17.6 million net losses, whereas
one year earlier it reported net earnings of EUR 27.7 million, or $
33.9 million. On ADR basis net losses for the first nine moths of 2005
totaled EUR 0.25, or $ 0.32, down from earnings per share of EUR 0.51,
or $ 0.63, reported in the first nine months of 2004.
Pasquale Natuzzi commented: "After two quarters in a row in which
the Company reported operating losses, in the third quarter 2005 the
Company achieved the break-even as a result of the implementation of
the Restructuring Plan announced last May. This first encouraging
result confirms that we must continue to improve the efficiency of our
manufacturing operations and reduce overall costs so to increase the
competitiveness of our products."
CASH FLOW
In the first nine months of 2005 net cash flow from operations
decreased at EUR 16.9 million, or $ 21.3 million, from EUR 70.0
million, or $ 85.8 million, generated in the same period of 2004. On a
per ADR basis, net operating cash flow was EUR 0.31, or $ 0.39, versus
EUR 1.28, or $ 1.57 generated during the first nine months of 2004.
OUTLOOK
Concluded Mr. Natuzzi: "The order flow confirms the encouraging
uptrend of our promotional line, Italsofa, while the Natuzzi brand,
manufactured in Italy, is still penalized by the strong Euro and the
price pressure. In addition, we do not underestimate the threat of
further increases in the cost of fuel and interest rates, and the
consequences of such events on consumer confidence.
In light of the above, we expect to report for the whole 2005 a
decrease between 10 and 15 percent of units sold and a net loss
between 1 and 3 percent on net sales, while in 2006 net profit margin
should be at most at 3 percent together with an increase in units sold
of about 5 percent."
CONVERSION RATES
The third quarter 2005 and 2004 dollar figures presented in this
announcement were converted at an average noon buying rate of $ 1.2196
per EUR and $ 1.2226 per EUR, respectively. The nine months figures
for 2005 and 2004 were converted at an average noon buying rate of $
1.2628 per EUR and $ 1.2255 per EUR, respectively.
ABOUT NATUZZI S.P.A.
Founded in 1959 by Pasquale Natuzzi, Natuzzi S.p.A. designs and
manufactures a broad collection of leather-upholstered residential
furniture.
Italy's largest furniture manufacturer, Natuzzi is the global
leader in the leather segment, exporting its innovative, high-quality
sofas and armchairs to 135 markets on 5 continents. Cutting-edge
design, superior Italian craftsmanship, and advanced,
vertically-integrated manufacturing operations underpin the Company's
market leadership.
Since 1990, Natuzzi has sold its furnishings in Italy through the
popular Divani & Divani by Natuzzi chain of 137 stores, which it
licenses to qualified furniture dealers. Outside Italy, the Company
sells to various furniture retailers, as well as through 150 licensed
Divani & Divani by Natuzzi and Natuzzi stores, including 6 Kingdom of
Leather stores.
Natuzzi S.p.A. was listed on the New York Stock Exchange on May
13, 1993. The Company is ISO 9001 and 14001 certified.
Forward-Looking Statements
Statements in this press release other than statements of
historical fact are "forward-looking statements". Forward-looking
statements are based on management's current expectations and beliefs
and therefore you should not place undue reliance on them. These
statements are subject to a number of risks and uncertainties,
including risks that may not be subject to the Company's control, that
could cause actual results to differ materially from those contained
in any forward-looking statement. These risks include, but are not
limited to, fluctuations in exchange rates, economic and weather
factors affecting consumer spending, competitive and regulatory
environment, as well as other political, economical and technological
factors, and other risks identified from time to time in the Company's
filings with the Securities and Exchange Commission, particularly in
the Company's annual report on Form 20-F. Forward looking statements
speak as of the date they were made, and the Company undertakes no
obligation to update publicly any of them in light of new information
or future events.
NATUZZI S.p.A. AND SUBSIDIARIES
Unaudited Consolidated Statement of Earnings
for the third quarter ended September 30, 2005 and 2004 on the basis
of Italian GAAP
(Expressed in millions of EUR except per share data)
3rd Quarter % 3rd Quarter % %
2005 Sales 2004 Sales Change
----------------- ----------------- -------
Upholstery net sales 130.5 147.1 -11.3%
Other sales 16.7 18.4 -9.2%
Net Sales 147.2 100% 165.5 100% -11.1%
-------------------------- ----------------- -------------------------
Purchases (63.4) (68.3) -7.2%
Labor (22.1) (23.8) -7.1%
Third-party Manufacturers (5.2) (6.3) -17.5%
Manufacturing Costs (8.5) (7.1) 19.7%
Inventories, net 0.6 (2.4) -125.0%
Cost of Sales (98.6) (107.9) -8.6%
-------------------------- ----------------- -------------------------
Gross Profit 48.6 33.0% 57.6 34.8% -15.6%
-------------------------- ----------------- -------------------------
Selling Expenses (39.3) (41.7) -5.8%
General and Administrative
Expenses (9.3) (9.2) 1.1%
Operating Income 0.0 0.0% 6.7 4.0% -100.0%
-------------------------- ----------------- -------------------------
Interest Income, net 0.0 0.0
Foreign Exchange, net (0.9) 1.8
Other Income (Expense), net (0.7) (1.0)
Earnings (Losses) before
taxes and minority interest (1.6) 7.5 -121.3%
-------------------------- ----------- ----------- -------
Income taxes (0.5) (1.8) -72.2%
Earnings (Losses) before
minority interest (2.1) 5.7 -136.8%
-------------------------- ----------- ----------- -------
Minority Interest (0.1) 0.1
Net Earnings (Losses) (2.0) -1.4% 5.6 3.4% -135.7%
========================== ================= =========================
Earnings (Losses) per
Share (0.04) 0.10 -140.0%
-------------------------- ----------- ----------- -------
Average Number of Shares
Outstanding* 54,681,628 54,681,628
----------------------------------------------------------------------
(*) Net of shares repurchased 1 EUR = 1,936.27 ITL
KEY FIGURES IN U.S. DOLLARS (millions)
3rd Quarter 3rd Quarter
2005 2004
Net Sales 179.5 202.3
Gross Profit 59.3 70.4
Operating Income (Loss) 0.0 8.2
Net Earnings (Losses) (2.4) 6.8
Earnings (Losses) per Share in U.S. dollars (0.05) 0.12
Average exchange rate (U.S. dollar per Euro) 1.2196 1.2226
NATUZZI S.P.A. AND SUBSIDIARIES
Unaudited Consolidated Statement of Earnings
for nine months ended September 30, 2005 and 2004 on the basis of
Italian GAAP
(Expressed in millions of EUR except per share data)
September % September % %
2005 Sales 2004 Sales Change
------------------ ------------------ -------
Upholstery net sales 421.9 497.6 -15.2%
Other sales 57.5 62.3 -7.6%
Net Sales 479.4 100.0% 559.9 100.0% -14.4%
------------------------ ------------------ --------------------------
Purchases (217.8) (238.4) -8.6%
Labor (78.3) (77.8) 0.6%
Third-party
Manufacturers (18.2) (21.6) -16.0%
Manufacturing Costs (24.7) (21.8) 13.3%
Inventories, net 15.0 4.0 274.7%
Cost of Sales (324.0) (355.6) -8.9%
------------------------ ------------------ --------------------------
Gross Profit 155.4 32.4% 204.3 36.5% -23.9%
------------------------ ------------------ --------------------------
Selling Expenses (133.7) (138.1) -3.2%
General and
Administrative Expenses (31.0) (29.0) 6.9%
Operating Income (Loss) (9.3) -1.9% 37.2 6.6% -125.0%
------------------------ ------------------ --------------------------
Interest Income, net 0.0 (0.1)
Foreign Exchange, net (3.9) 2.7
Other Income, net (1.7) (0.5)
Earnings (Losses) before
taxes and minority
interest (14.9) 39.3 -137.9%
------------------------------------ ----------- -------
Income taxes 0.9 (11.5) -107.8%
Earnings (Losses) before
minority interest (14.0) 27.8 -150.4%
------------------------ ----------- ----------- -------
Minority Interest (0.1) 0.1
Net Earnings (13.9) -2.9% 27.7 4.9% -150.2%
======================== ================== ==========================
Earnings (Loss) per
Share (0.25) 0.51 -150.2%
------------------------ ----------- ----------- -------
Average Number of Shares
Outstanding* 54,681,628 54,681,628
----------------------------------------------------------------------
(*) Net of shares repurchased 1 EUR = 1,936.27 ITL
KEY FIGURES IN U.S. DOLLARS (millions)
First nine months of First nine months of
2005 2004
Net Sales 605.4 686.2
Gross Profit 196.2 250.4
Operating Profit (Loss) (11.7) 45.6
Net Earnings (Losses) (17.6) 33.9
Earnings (Losses) per Share
in U.S. dollars (0.32) 0.63
Average exchange rate (U.S.
dollar per Euro) 1.2628 1.2255
GEOGRAPHIC BREAKDOWN
Sales Seat Units
(Expressed in
millions of EUR)
3rd 3rd 3rd 3rd
Quarter Quarter % Quarter Quarter %
-------- -------- ------ -------- -------- ------
2005 2004 Change 2005 2004 Change
-------- -------- ------ -------- -------- ------
Americas 59.4 69.2 -14.2% 326,633 385,582 -15.3%
% of total 45.5% 47.0% 52.2% 56.2%
Europe 61.2 66.9 -8.5% 261,848 257,441 1.7%
% of total 46.9% 45.5% 41.9% 37.5%
Rest of world 9.9 11.0 -10.0% 36,816 43,031 -14.4%
% of total 7.6% 7.5% 5.9% 6.3%
TOTAL 130.5 147.1 -11.3% 625,297 686,054 -8.9%
-------------------- -------- -------- ------ -------- -------- ------
BREAKDOWN BY COVERING
Sales Seat Units
(Expressed in
millions of EUR)
3rd 3rd 3rd 3rd
Quarter Quarter % Quarter Quarter %
-------- -------- ------ -------- -------- ------
2005 2004 Change 2005 2004 Change
-------- -------- ------ -------- -------- ------
Leather 110.5 120.7 -8.5% 504,545 518,687 -2.7%
% of total 84.7% 82.1% 80.7% 75.6%
Fabric 20.0 26.4 -24.2% 120,752 167,367 -27.9%
% of total 15.3% 17.9% 19.3% 24.4%
TOTAL 130.5 147.1 -11.3% 625,297 686,054 -8.9%
-------------------- -------- -------- ------ -------- -------- ------
BREAKDOWN BY BRAND
Sales Seat Units
(Expressed in
millions of EUR)
3rd 3rd 3rd 3rd
Quarter Quarter % Quarter Quarter %
-------- -------- ------ -------- -------- ------
2005 2004 Change 2005 2004 Change
-------- -------- ------ -------- -------- ------
Natuzzi 78.6 111.3 -29.4% 291,659 432,999 -32.6%
% of total 60.2% 75.7% 46.6% 63.1%
Italsofa 51.9 35.8 45.0% 333,638 253,055 31.8%
% of total 39.8% 24.3% 53.4% 36.9%
TOTAL 130.5 147.1 -11.3% 625,297 686,054 -8.9%
-------------------- -------- -------- ------ -------- -------- ------
GEOGRAPHIC BREAKDOWN
Sales Seat Units
(Expressed in
millions of EUR)
September September % September September %
--------- --------- ------ ---------- ---------- ------
2005 2004 Change 2005 2004 Change
--------- --------- ------ ---------- ---------- ------
Americas 176.9 225.3 -21.5% 1,019,390 1,251,530 -18.5%
% of total 41.9% 45.3% 50.8% 54.5%
Europe 216.3 238.5 -9.3% 870,393 908,823 -4.2%
% of total 51.3% 47.9% 43.3% 39.5%
Rest of world 28.7 33.8 -15.1% 118,325 138,288 -14.4%
% of total 6.8% 6.8% 5.9% 6.0%
TOTAL 421.9 497.6 -15.2% 2,008,108 2,298,641 -12.6%
-------------- --------- --------- ------ ---------- ---------- ------
BREAKDOWN BY COVERING
Sales Seat Units
(Expressed in
millions of EUR)
September September % September September %
--------- --------- ------ ---------- ---------- ------
2005 2004 Change 2005 2004 Change
--------- --------- ------ ---------- ---------- ------
Leather 351.6 409.4 -14.1% 1,571,230 1,753,002 -10.4%
% of total 83.3% 82.3% 78.2% 76.3%
Fabric 70.3 88.2 -20.3% 436,878 545,639 -19.9%
% of total 16.7% 17.7% 21.8% 23.7%
TOTAL 421.9 497.6 -15.2% 2,008,108 2,298,641 -12.6%
-------------- --------- --------- ------ ---------- ---------- ------
BREAKDOWN BY BRAND
Sales Seat Units
(Expressed in
millions of EUR)
September September % September September %
--------- --------- ------ ---------- ---------- ------
2005 2004 Change 2005 2004 Change
--------- --------- ------ ---------- ---------- ------
Natuzzi 281.5 377.0 -25.3% 1,066,735 1,475,218 -27.7%
% of total 66.7% 75.8% 53.1% 64.2%
Italsofa 140.4 120.6 16.4% 941,373 823,423 14.3%
% of total 33.3% 24.2% 46.9% 35.8%
TOTAL 421.9 497.6 -15.2% 2,008,108 2,298,641 -12.6%
-------------- --------- --------- ------ ---------- ---------- ------
NATUZZI S.P.A. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheet
as of September 30, 2005 and December 31, 2004
(Expressed in millions of EUR)
September 30, December 31,
2005 2004
Current Assets:
Cash and cash equivalents 85.7 87.3
Marketable debt securities 0.0 0.0
Trade receivables, net 106.4 137.6
Other receivables 41.2 41.2
Inventories 127.6 112.6
Unrealized foreign exchange gain 0.0 7.1
Prepaid expenses and accrued income 2.0 2.4
Deferred income taxes 6.9 1.2
------------- ------------
Total current assets 369.8 389.4
------------- ------------
Non-Current Assets:
Net property, plant and equipment 268.6 272.0
Treasury shares 0.0 0.0
Other assets 12.8 11.2
Deferred income taxes 0.6 0.6
------------- ------------
Total Assets 651.8 673.2
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings 7.7 5.6
Current portion of long-term debt 0.1 0.6
Accounts payable-trade 64.6 83.7
Accounts payable-shareholders for dividends 0.6 0.6
Accounts payable-other 23.5 19.7
Allowance for unrealized foreign exchange
losses 5.0 0.0
Income taxes 1.9 2.5
Salaries, wages and related liabilities 19.7 18.7
Total current liabilities 123.1 131.4
------------- ------------
Long-Term Liabilities:
Employees' termination indemnity 31.7 29.6
Long-term debt 6.1 5.0
Deferred income taxes 0.4 0.4
Deferred income for capital grants 11.8 12.5
Other liabilities 7.6 5.4
Minority Interest 0.8 0.9
Shareholders' Equity:
Share capital 54.7 54.7
Reserves 42.3 42.3
Additional paid-in capital 8.3 8.3
Retained earnings 365.0 382.7
Total shareholders' equity 470.3 488.0
------------- ------------
Total Liabilities and Shareholders' Equity 651.8 673.2
============= ============
NATUZZI S.P.A. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
as of September 30, 2005 and 2004
(Expressed in millions of EUR)
September 30 September 30
------------ ------------
2005 2004
------ ------
Cash flows from operating activities:
Net earnings (13.9) 27.7
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 21.9 20.9
Employees' leaving entitlement 1.9 1.6
Deferred income taxes (5.7) (3.4)
Minority interest (0.1) 0.1
(Gain) loss on disposal of assets 0.6 0.9
Change in provision for unrealized
foreign exchange (losses) / gain 12.1 3.3
Gain on disposal of business 0.0 0.0
Impairment losses 0.0 0.0
Change in assets and liabilities:
Receivables, net 31.2 20.9
Inventories (14.1) (4.0)
Prepaid expenses and accrued income 0.4 (1.3)
Other assets 3.3 12.8
Accounts payable (21.2) (9.7)
Income taxes (0.6) 0.0
Salaries, wages and related liabilities 1.0 0.6
Other liabilities 0.1 (0.4)
------------- -------------
Total adjustments 30.8 42.3
------------- -------------
Net cash provided by operating activities 16.9 70.0
------------- -------------
Cash flows from investing activities:
Property, plant and equipment:
Additions (19.6) (36.0)
Disposals 0.4 7.7
Government grants received 0.0 0.0
Marketable debt securities:
Purchases 0.0 (0.2)
Proceeds from maturities 0.0 0.0
Proceeds from sales 0.0 0.2
Purchase of business, net of cash acquired 0.0 0.0
Purchase of minority interest (0.3) (2.9)
Disposal of business 0.0 0.0
------------- -------------
Net cash used in investing activities (19.5) (31.2)
Cash flows from financing activities:
Long term debt:
Proceeds 0.3 0.6
Repayments (0.5) (1.2)
Short-term borrowings 1.6 7.5
Exercise of stock options 0.0 0.0
Treasury shares 0.0 0.0
Dividends paid (3.8) (7.7)
Dividends paid to minority shareholders (0.1) 0.0
------------- -------------
Net cash used in financing activities (2.5) (0.8)
------------- -------------
Effect of translation adjustments on cash 3.5 0.2
------------- -------------
Increase (decrease) in cash and cash
equivalents (1.6) 38.2
Cash and cash equivalents, beginning of
the year 87.3 63.6
Cash and cash equivalents, end of the
period 85.7 101.8
CONTACT: Natuzzi S.p.A.
Investor Relations Dept.
Tel.: +39-080-8820-812
Fax: +39-080-8820-241
E-mail: investor_relations@natuzzi.com
or
Corporate Press Office
Tel.: +39-080-8820-124
Fax: +39-080-8820-508
E-mail: relazioni.esterne@natuzzi.com
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NATUZZI S.p.A.
(Registrant)
Date: 15th November 2005 By: /s/ GIUSEPPE DESANTIS
----------------------------
Giuseppe Desantis