CONFORMED
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 September 2003 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 Second Quarter and First Half 2003 Financial Results
and Initiatives for Improving Competitiveness
SANTERAMO IN COLLE, Bari, Italy--(BUSINESS WIRE)--Sept. 3, 2003--
Quarter's highlights:
-- Unit sales up 0.6%
-- Net sales decreased 6.6% as a result of the unfavorable
currency translation
-- Net profit margin at 5.9% versus 13.7% reported in the second
quarter 2002
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 second quarter and first half
2003.
NET SALES
----------------------------------------------------------------------
Natuzzi's second quarter 2003 net sales decreased 6.6 percent from EUR
217.0 million or $ 199.3 million to EUR 202.6 million or $ 230.1
million while in the same period total seats sold increased 0.6
percent. In the six-month period net sales decreased 10.3 percent to
EUR 386.1 million or $ 426.7 million and total seats sold decreased
1.8 percent.
In the second quarter 2003 net upholstery sales decreased 9.8 percent
compared to the prior year's quarter to EUR 179.1 million, or $ 203.4
million, while other sales (principally living-room accessories and
raw materials produced by the Company and sold to third parties)
increased 27.0 percent to EUR 23.5 million or $ 26.7 million.
Second quarter 2003 net upholstery sales in the Americas were EUR 79.5
million, or $ 90.3 million, a decrease of 20.7 percent over the
previous year's quarter. In Europe, net upholstery sales increased 5.1
percent to EUR 90.6 million, or $ 102.9 million, while in the rest of
the world upholstery sales decreased 25 percent to EUR 9 million, or $
10.2 million.
In the second quarter 2003, total net sales to Divani & Divani by
Natuzzi, Natuzzi stores and to the recently acquired Kingdom of
Leather's 14 store chain increased 25.3 percent to EUR 28.2 million,
or $ 32.0 million. During the quarter 7 new stores were opened in
Italy, Spain, Switzerland and China bringing the total number of
stores, including the aforesaid fourteen Kingdom of Leather's stores,
to 128 in Italy and 90 outside Italy.
Leather-upholstered furniture sales, which accounted for 82.1 percent
of second quarter total net upholstery sales, decreased 14 percent
over the last year's quarter to EUR 147.1 million, or $ 167.1 million,
while fabric upholstered furniture sales in second quarter 2003, were
EUR 32.0 million, or $ 36.3 million, up 16.4 percent compared to the
second quarter 2002.
Second quarter 2003 net sales of Natuzzi-branded furniture were EUR
142.3 million, or $ 161.6 million, down 11.7 percent compared to last
year's quarter of EUR 161.2 million, or $ 148.1 million. In the same
period, net sales of Italsofa branded furniture decreased 1.3 percent
to EUR 36.8 million, or $ 41.8 million, from EUR 37.3 million, or $
34.3 million.
Pasquale Natuzzi, Chairman and Chief Executive Officer, said, "The
decrease of net sales in the second quarter 2003 compared to the same
period one year ago, was due to the unfavorable translation effect
caused by the strong appreciation of the Euro against the US Dollar
and other main currencies in which the Company exports, while seats
sold increased marginally."
GROSS PROFIT & OPERATING INCOME
----------------------------------------------------------------------
Natuzzi's second quarter 2003 gross profit decreased 11.8 percent to
EUR 69.6 million, or $ 79.1 million, compared to last year's quarter.
Over the same period, Natuzzi's gross profit margin decreased to 34.4
percent from 36.4.
Second quarter 2003 operating income decreased 74.6 percent to EUR 8.2
million or $ 9.3 million while the operating margin for each year's
comparable quarter were 4.0 percent and 14.9 percent, respectively.
NET INCOME & EARNINGS PER SHARE
----------------------------------------------------------------------
Net Income for the second quarter 2003 decreased 60.1 percent versus
last year's quarter to EUR 11.9 million, or $ 13.5 million, while
earnings per share (ADR) was EUR 0.22, or $ 0.25. In the six-month
period net income decreased 51.5 percent to EUR 26.7 million, or $
29.5 million from EUR 55.1 million or $ 49.5 million in the prior
year's comparable period.
Pasquale Natuzzi commented, "The strong pressure on prices, the
consistent appreciation of the Euro and increasing investments related
to the opening of new galleries and stores and advertising, had a
negative impact on net income for the period."
CASH FLOW
----------------------------------------------------------------------
Net cash flow from operations for the first half 2003 decreased 46.4
percent to EUR 22.4 million, or $ 24.8 million, from EUR 41.8 million,
or $ 37.5 million generated in the last year. On a per ADR basis, net
operating cash flow was EUR 0.41, or $ 0.45, compared to EUR 0.76 or $
0.68 in the first half 2002.
FOREX & TAXES
----------------------------------------------------------------------
In the second quarter 2003, Natuzzi had a net foreign exchange gain of
EUR 4.1 million, or $ 4.7 million, versus EUR 5.5 million or $ 5.1
million reported in last year's comparable period.
Income taxes for second quarter 2003 were EUR 2.6 million, or $ 3.0
million, representing an effective tax rate of 17.9 percent versus a
21.6 percent rate in the prior year's period.
PLAN TO IMPROVE COMPETITIVENESS
----------------------------------------------------------------------
The Company's performance is affected by the unfavorable appreciation
of the Euro against the major currencies and a cost structure which
requires improvements to compete successfully in an industry
challenged by the growing competition from low cost countries.
In light of this, Natuzzi has finalized a plan to improve
competitiveness through initiatives aimed at increasing productivity
and reducing costs. The objective of the plan is to generate cost
savings of EUR 35 to 40 millions in 2004.
At the same time the Company will continue to support the Natuzzi
brand with large investments in advertising, research and development
and the opening of new galleries and stores.
Pasquale Natuzzi said, "Since the beginning, 44 years ago, the Group's
mission has been to make leather upholstery affordable to a wider
population of consumers everywhere in the world. Today this mission is
continued in the Natuzzi brand: A unique opportunity for everyone to
have a high quality, well designed living room made in Italy at a
competitive price. To achieve this goal, we have to enhance brand
values with large investments in advertising, improvements in the
distribution and prices that are competitive due to lower costs and
higher operating efficiencies.
New investments will be made in the next eighteen months at our
Italsofa's plants abroad. The competitiveness of this promotional
brand is largely dependent on prices that the cost structure of our
production in Italy cannot achieve anymore.
In order to provide motivation in support of the goals set in the plan
and reinforce a culture of participation in creating value for the
Company, we will introduce a new stock option plan extended to
management and key people by the end of 2003," concluded Pasquale
Natuzzi.
OUTLOOK
----------------------------------------------------------------------
Considering the still unfavorable economic and currency conditions,
the continuing price competition and the fact that the benefits of the
above- mentioned plan should impact mostly year 2004, the Company
forecasts for full year 2003 a net profit margin of approximately 6
percent.
CONVERSION RATES
----------------------------------------------------------------------
The second quarter 2003 and 2002 dollar figures presented in this
announcement were converted at an average noon buying rate of $ 1.1359
per EUR and $ 0.9185 per EUR, respectively. The six months figures for
2003 and 2002 were converted at an average noon buying rate of $
1.1051 per EUR and $ 0.8981 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 123 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 129 stores, which it
licenses to qualified furniture dealers. Outside Italy, the Company
sells to various furniture retailers, as well as through 78 licensed
Divani & Divani by Natuzzi and Natuzzi stores and 14 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.
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 second quarter ended June 30, 2003 and 2002
on the basis of Italian GAAP
(Expressed in millions of EUR except per share data)
2nd Quarter % 2nd Quarter % %
----------- ----- ----------- ----- --------
2003 Sales 2002 Sales Change
----------- ----- ----------- ----- --------
Upholstery net sales 179.1 198.5 -9.8%
Other sales 23.5 18.5 27.0%
----------- -----------
Net Sales 202.6 100% 217.0 100% -6.6%
Purchases (105.1) (89.1) 18.0%
Labor (27.1) (28.8) -5.9%
Third-party Manufacturers (9.9) (11.1) -10.8%
Manufacturing Costs (7.0) (7.8) -10.3%
Inventories, net 16.1 (1.3) -1338.5%
----------- -----------
Cost of Sales (133.0) (138.1) -3.7%
----------- -----------
Gross Profit 69.6 34.4% 78.9 36.4% -11.8%
Selling Expenses (51.6) (36.0) 43.3%
General and
Administrative Expenses (9.8) (10.6) -7.5%
----------- -----------
Operating Income 8.2 4.0% 32.3 14.9% -74.6%
Interest Income, net 0.2 0.2
Foreign Exchange, net 4.1 5.5
Other Income, net 2.0 (0.1)
----------- -----------
Earnings before taxes and
minority interest 14.5 37.9 -61.7%
Income taxes (2.6) (8.2) -68.3%
----------- -----------
Earnings before minority
interest 11.9 29.7 -59.9%
Minority Interest 0.0 (0.1)
------------ ------------
Net Earnings 11.9 5.9% 29.8 13.7% -60.1%
============ ============
Earnings per Share 0.22 0.54
============ ============
Average Number of Shares
Outstandings(1) 54,681,628 54,681,628
(1) Net of shares repurchased 1 EUR = 1,936.27 ITL
KEY FIGURES IN U.S. DOLLARS (millions)
2nd Quarter 2nd Quarter
2003 2002
------------- -----------
Net Sales 230.1 199.3
Gross Profit 79.1 72.5
Operating Profit 9.3 29.7
Net Earnings 13.5 27.4
Earnings per Share in U.S. dollars 0.25 0.50
Average exchange rate (U.S. dollar per Euro) 1.1359 0.9185
NATUZZI S.p.A. AND SUBSIDIARIES
Unaudited Consolidated Statement of Earnings
for six months ended June 30, 2003 and 2002
on the basis of Italian GAAP
(Expressed in millions of EUR except per share data)
1st Half % 1st Half % %
----------- ----- ----------- ----- -------
2003 Sales 2002 Sales Change
----------- ----- ----------- ----- -------
Upholstery net sales 343.7 393.9 -12.7%
Other sales 42.4 36.7 15.5%
----------- -----------
Net Sales 386.1 100% 430.6 100% -10.3%
Purchases (189.4) (179.4) 5.6%
Labor (54.1) (58.6) -7.7%
Third-party Manufacturers (17.6) (21.1) -16.6%
Manufacturing Costs (14.4) (14.8) -2.7%
Inventories, net 17.4 0.5 3380.0%
----------- -----------
Cost of Sales (258.1) (273.4) -5.6%
----------- -----------
Gross Profit 128.0 33.2% 157.2 36.5% -18.6%
Selling Expenses (88.3) (73.8) 19.6%
General and Administrative
Expenses (18.4) (19.5) -5.6%
----------- -----------
Operating Income 21.3 5.5% 63.9 14.8% -66.7%
Interest Income, net 0.6 0.5
Foreign Exchange, net 10.1 5.9
Other Income, net 1.2 0.2
----------- -----------
Earnings before taxes and
minority interest 33.2 70.5 -52.9%
Income taxes (6.5) (15.4) -57.8%
----------- -----------
Earnings before minority
interest 26.7 55.1 -51.5%
Minority Interest 0.0 0.0
----------- -----------
Net Earnings 26.7 6.9% 55.1 12.8% -51.5%
============ ============
Earnings per Share 0.49 1.01
============ ============
Average Number of Shares
Outstandings(1) 54,681,628 54,681,628
(1) Net of shares repurchased 1 EUR = 1,936.27 ITL
KEY FIGURES IN U.S. DOLLARS (millions)
1st Half 1st Half
2003 2002
-------- ---------
Net Sales 426.7 386.7
Gross Profit 141.5 141.2
Operating Profit 23.5 57.4
Net Earnings 29.5 49.5
Earnings per Share in U.S. dollars 0.54 0.91
Average exchange rate (U.S. dollar per Euro) 1.1051 0.8981
GEOGRAPHIC BREAKDOWN
Sales Seat Units
(Expressed in
millions of EUR)
2nd 2nd 2nd 2nd
Quarter Quarter % Quarter Quarter %
-------- -------- ------ -------- -------- ------
2003 2002 Change 2003 2002 Change
-------- -------- ------ -------- -------- ------
Americas 79.5 100.3 -20.7% 442,418 418,653 5.7%
% of total 44.4% 50.5% 54.9% 52.2%
Europe 90.6 86.2 5.1% 320,225 333,103 -3.9%
% of total 50.6% 43.4% 39.7% 41.6%
Rest of world 9.0 12.0 -25.0% 43,326 49,528 -12.5%
% of total 5.0% 6.0% 5.4% 6.2%
TOTAL 179.1 198.5 -9.8% 805,969 801,284 0.6%
-------------------- -------- -------- ------ -------- -------- ------
BREAKDOWN BY COVERING
Sales Seat Units
(Expressed in
millions of EUR)
2nd 2nd 2nd 2nd
Quarter Quarter % Quarter Quarter %
--------- -------- ------ -------- -------- --------
2003 2002 Change 2003 2002 Change
--------- -------- ------ -------- -------- --------
Leather 147.1 171.0 -14.0% 615,859 656,962 -6.3%
% of total 82.1% 86.1% 76.4% 82.0%
Fabric 32.0 27.5 16.4% 190,110 144,322 31.7%
% of total 17.9% 13.9% 23.6% 18.0%
TOTAL 179.1 198.5 -9.8% 805,969 801,284 0.6%
----------------- --------- -------- ------ -------- -------- --------
BREAKDOWN BY BRAND
Sales Seat Units
(Expressed in
millions of EUR)
2nd 2nd 2nd 2nd
Quarter Quarter % Quarter Quarter %
-------- -------- ------ -------- -------- ------
2003 2002 Change 2003 2002 Change
-------- -------- ------ -------- -------- ------
Natuzzi 142.3 161.2 -11.7% 550,049 597,797 -8.0%
% of total 79.5% 81.2% 68.2% 74.6%
Italsofa 36.8 37.3 -1.3% 255,920 203,487 25.8%
% of total 20.5% 18.8% 31.8% 25.4%
TOTAL 179.1 198.5 -9.8% 805,969 801,284 0.6%
-------------------- -------- -------- ------ -------- -------- ------
GEOGRAPHIC BREAKDOWN
Sales Seat Units
(Expressed in
millions of EUR)
1st Half 1st Half % 1st Half 1st Half %
---------- -------- ------ ---------- ---------- ------
2003 2002 Change 2003 2002 Change
---------- -------- ------ ---------- ---------- ------
Americas 158.8 197.7 -19.7% 843,771 804,947 4.8%
% of total 46.2% 50.2% 54.6% 51.1%
Europe 167.3 174.8 -4.3% 620,060 679,862 -8.8%
% of total 48.7% 44.4% 40.1% 43.2%
Rest of world 17.6 21.4 -17.8% 81,542 88,960 -8.3%
% of total 5.1% 5.4% 5.3% 5.7%
TOTAL 343.7 393.9 -12.7% 1,545,373 1,573,769 -1.8%
-------------- ---------- --------- ----- ---------- ---------- ------
BREAKDOWN BY COVERING
Sales Seat Units
(Expressed in
millions of EUR)
1st Half 1st Half % 1st Half 1st Half %
-------- --------- ------ ---------- ---------- ------
2003 2002 Change 2003 2002 Change
-------- --------- ------ ---------- ---------- ------
Leather 280.1 334.0 -16.1% 1,162,623 1,262,493 -7.9%
% of total 81.5% 84.8% 75.2% 80.2%
Fabric 63.6 59.9 6.2% 382,750 311,276 23.0%
% of total 18.5% 15.2% 24.8% 19.8%
TOTAL 343.7 393.9 -12.7% 1,545,373 1,573,769 -1.8%
--------------- -------- --------- ------ ---------- ---------- ------
BREAKDOWN BY BRAND
Sales Seat Units
(Expressed in
millions of EUR)
1st Half 1st Half % 1st Half 1st Half %
--------- --------- ------ ---------- -----------------
2003 2002 Change 2003 2002 Change
--------- --------- ------ ---------- -----------------
Natuzzi 277.0 331.4 -16.4% 1,094,902 1,237,457 -11.5%
% of total 80.6% 84.1% 70.9% 78.6%
Italsofa 66.7 62.5 6.7% 450,471 336,312 33.9%
% of total 19.4% 15.9% 29.1% 21.4%
TOTAL 343.7 393.9 -12.7% 1,545,373 1,573,769 -1.8%
-------------- --------- --------- ------ ---------- -----------------
NATUZZI S.p.A. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheet
as of June 30, 2003 and December 31, 2002
(Expressed in millions of EUR)
ASSETS June 30, December
31,
--------- ---------
2003 2002
--------- ---------
Current Assets:
Cash and cash equivalents 92.3 96.7
Marketable debt securities - -
Trade receivables, net 149.2 158.4
Other receivables 47.8 58.3
Inventories 101.4 84.1
Unrealized foreign exchange gain 14.6 2.0
Prepaid expenses and accrued income 3.9 1.3
Deferred income taxes 1.1 1.8
Total current assets 410.3 402.6
--------- ---------
Non-Current Assets:
Net property, plant and equipment 243.8 228.9
Treasury shares 37.8 37.8
Other assets 14.1 5.1
Deferred income taxes 0.1 0.1
Total Assets 706.1 674.5
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings 2.4 0.2
Current portion of long-term debt 3.2 1.4
Accounts payable-trade 86.8 87.5
Accounts payable-shareholders for dividends 18.8 -
Accounts payable-other 16.7 15.7
Allowance for unrealized foreign exchange losses - -
Income taxes 3.6 9.2
Salaries, wages and related liabilities 19.0 14.7
Total current liabilities 150.5 128.7
--------- ---------
Long-Term Liabilities:
Employees' termination indemnity 26.5 25.6
Long-term debt 4.6 3.6
Deferred income taxes 0.4 0.4
Accrued expenses and deferred income 13.8 14.2
Other liabilities 5.4 5.7
Minority Interest 0.5 0.5
Shareholders' Equity:
Share capital 57.5 57.5
Reserves 80.4 73.1
Additional paid-in capital 8.3 8.3
Retained earnings 358.2 356.9
Total shareholders' equity 504.4 495.8
--------- ---------
Total Liabilities and Shareholders' Equity 706.1 674.5
========= =========
NATUZZI S.p.A. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
as of June 30, 2003 and 2002
(Expressed in millions of EUR)
June 30 June 30
2003 2002
----------------
Cash flows from operating activities:
Net earnings 26.7 55.1
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 10.7 8.5
Employees' termination indemnity 0.9 1.6
Deferred income taxes 0.7 (0.2)
Minority interest - -
(Gain) loss on disposal of assets 0.3 -
Change in provision for unrealized foreign exchange
(losses)/gain (12.5) (5.9)
Change in assets and liabilities:
Receivables, net 10.0 (31.4)
Inventories (11.6) (0.5)
Prepaid expenses and accrued income (2.7) (2.2)
Other assets 13.1 (3.3)
Accounts payable (3.3) 4.2
Income taxes (5.6) 3.1
Salaries, wages and related liabilities 4.3 6.7
Other liabilities (8.8) 6.1
----- ------
Total adjustments (4.3) (13.3)
----- ------
Net cash provided by operating activities 22.4 41.8
----- ------
Cash flows from investing activities:
Property, plant and equipment:
Additions (22.0) (33.9)
Disposals 0.4 0.4
Government grants received 0.3 0.1
Marketable debt securities:
Purchases - -
Proceeds from maturities - -
Proceeds from sales - -
Purchase of business, net of cash acquired - -
Purchase of minority interest (4.3) -
------ ------
Net cash used in investing activities (25.6) (33.4)
Cash flows from financing activities:
Long term debt:
Proceeds - -
Repayments 0.4 (0.6)
Short-term borrowings 0.3 (4.6)
Exercise of stock options - -
Treasury shares - -
Dividends paid - -
Dividends paid to minority shareholders - -
----- -----
Net cash used in financing activities 0.7 (5.2)
----- -----
Effect of translation adjustments on cash (1.8) (1.7)
----- -----
Increase (decrease) in cash and cash equivalents (4.4) 1.5
Cash and cash equivalents, beginning of the year 96.7 208.2
Cash and cash equivalents, end of the period 92.3 209.7
Natuzzi S.p.A.
Second Quarter and First Half 2003
Financial Results Teleconference
Senior management will review second quarter 2003 financial results.
The review will be followed by a question and answer session.
Pasquale Natuzzi
Chairman of the Board and Chief Executive Officer
Giuseppe Desantis
Vice Chairman of the Board
Nicola Dell'Edera
Finance Director
and
Fred Starr
President and Chief Executive Officer, Natuzzi Americas
Thursday, September 4, 2003
---------------------------
10:00 a.m. (New York time)
3:00 p.m. (London time)
4:00 p.m. (Italian time)
Replay of this event will be available on our web-site
www.natuzzi.com
---------------
starting from 3:00 p.m. Italian time on September 5, 2003.
CONTACT: Investor Relations Dept., +39-080-8820-412
investor_relations@natuzzi.com
OR
Corporate Press Office, +39-080-8820-124
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: 3rd September 2003 By:_/s/_GIUSEPPE DESANTIS____
Giuseppe Desantis