Natuzzi: Margins Continue to Improve

The Board of Directors of Natuzzi S.p.A. (NYSE:NTZ) has approved the Q1 2016 consolidated results.

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

"The first quarter 2016 results have continued to build upon the improving margins of previous quarters.

In the first three months of 2016, with revenue slightly contracting (-1.5%), Natuzzi brand sales accounted for 71% of core Group revenue.

The Retail expansion of the Natuzzi brand continued, with the opening of 10 new sales points, of which 5 in China - a key market with growth of 11.5% in the first quarter of the year.

The UK market grew by 7.2% and now is the second largest for Natuzzi after the United States.

Leveraging on the existing distribution network and brand awareness, we saw positive performance for Germany, Belgium and Spain, confirming Western Europe - together with China and the United States - as key markets for the development of the Retail business. The American market still presents significant potential for expansion, where we have invested in hiring three new managers with proven Retail experience.

Softaly (Private Label) represented 29% of core Group sales in the first three months of 2016, seeing growth in the EMEA region (+15.1%), in particular in the UK and Germany.

The lower retail sales of one of our major customers are negatively affecting our Q2 2016 private label order flow. However the strategy of the Group is to recover in the second half of the year. We will do this by focusing on new key accounts which have already been identified during the last fairs.

Natuzzi brand order flow is growing versus prior year, confirming the effectiveness of the actions put in place to support the Retail development.

The gross margin on sales improved by 4.9pp. This is due primarily to plants streamlining and the reduction of raw material costs, in particular leather.

Due to what is discussed above as well as stabilized G&A costs, EBITDA reported a profit of Euro 4.3 million, compared to a loss of Euro 1.4 million in Q1 2015.

EBIT also performed in a positive way, improving from a loss of Euro 4.9 million in Q1 2015 to a profit of Euro 1.1 million in Q1 2016, with the group Net Result therefore also improving to a loss of Euro 0.2 million, from Euro -9.8 million in Q1 2015.

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 €488.5 million in 2015, 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.

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