JSE-listed Italtile’s basic earnings a share rose by 3% to 90.3c, while headline earnings a share decreased by 1% to 85.7c for the year ended June 30.
Revenue grew by 4% to R3.7-billion, while after-tax profit rose 3% to R880-million.
At the end of the first six months of the period, Italtile’s management had cautioned that, owing to the subdued economic climate and constrained consumer demand, results in the second half of the financial would be weaker than the first, as well as being weaker than the comparable second half in 2016.
“Disappointingly, this forecast proved to be accurate, with sales and profitability failing to meet management’s targets,” CEO Jan Potgieter said in a statement on Wednesday.
Key factors contributing to the inadequate performance included the slowdown in consumers’ discretionary spending, the volatility of the rand, the group’s overstock position, and the general country-specific risks which continue to prompt both private and public sector investors to suspend investment in property.
Trading conditions and consumer sentiment continued to deteriorate over the year because of poor economic growth and sociopolitical uncertainty.
In this adverse environment, homeowners curtailed or deferred discretionary spend on residential improvements and renovations.
In general, large segments of the market remained overstocked owing to the downturn in consumer demand and the high level of imported product in the country as a result of opportunistic traders capitalising on currency strength.
“Historically, traditionally house-proud South Africans have invested relatively freely in upgrading or replacing their homes. However, with intensified pressure on disposable incomes, homeowners increasingly view property spend as a luxury indulgence and are significantly more discerning in their purchases, which are now less frequent than in prior years, and [are becoming] more selective in their choice of retailers,” he noted. Italtile grew its store network to 162 from 146 over the year. Of these, 18 are located outside of South Africa.
The strongest performing regions across the brand portfolio were Limpopo and the Western Cape, while Gauteng, the region which historically delivered the group’s highest value in sales, reported flat results.
The company declared a final dividend of 14c, taking its dividend for the year to 30c from 29c the previous year.