Although continuing to face sustained economic instability and constrained disposable income, the renovation and commercial project segments of Italtile's business saw it post system-wide turnover of R3.5-billion for the six months ended December 31, up 14% from the comparative period of 2015.

Like-on-like retail store revenue also grew 8.8%, while the reported trading profit increased by 12% to R594-million.

However, the JSE-listed company noted that, as consumer and industry confidence levels continue to decline, a general slowdown in activity in the building and construction sector was experienced, with little improvement reported in the new-build market.

The company reported a 15% increase in basic earnings a share to 51.1c, while headline earnings grew 7% to 46.6c apiece, with the disparity attributable to a gain of R37-million realised during the period on the disposal of the Italtile Australia property holding business, which together with local property disposal profits of R15-million, is excluded from headline earnings.

Across the income spectrum, investment in durable home improvement merchandise is increasingly regarded as a luxury, and disposable income is allocated only after extensive research and consideration, the company said, adding that, in this environment, consumers continued to favour multifaceted value.

The company further felt impacts from opportunistic importers and established peer competitors taking advantage of sporadic rand strength, driving a strong influx of imported product, to the extent that an overstock situation was evident across large segments of the market. “As a result, price competition is expected to intensify over the forthcoming months,” it said.

Inventories increased to R761-million from the June 2016 financial year-end balance of R693-million, owing to the net addition of six new corporate stores over the six months; the introduction of new merchandise categories and ranges across the operations; early arrival of substantial imported stock in the Cedar Point business; an overly conservative approach in application of certain stock parameters of the group's business optimisation programme; and anticipated sales volumes not being realised.

Given Italtile’s higher-than-standard inventory levels at the close of the period, stock provisions have been appropriately increased, although management is satisfied that stock levels will have normalised by the end of the current financial year.

As at December 31, Italtile’s cash and cash equivalent reserves stood at R182-million, down from R351-million in the prior year, after capital expenditure, increased stockholding, a dividend payment of R147-million and tax payments of R146-million.

The company declared a dividend of 16c a share, up 14% from the prior year.