Italtile (ITE) – Old gas in the pipeline

ITE had a rather disappointing 1H24, where its results were affected by lower demand for merchandise and a constrained consumer wallet, which led to consumers trading down. Lower volumes in the Retail segment adversely affected the manufacturing side, which had to contend with higher input costs and excess capacity, increasing operating expenses. As a result, topline growth was negative and margins contracted as ITE made the decision in some areas to absorb cost increases to protect price-sensitive consumers.


Retail turnover fell by 6.0% y-y, as sales volume demand was dampened at the Italtile Retail and CTM brands. Like-for-like retail store turnover (excluding sales of stores opened and closed in the period) declined by 3% y-y.


Turnover in the Manufacturing segment decreased by 4.2% y-y, as the segment struggled with running at full utilisation as a result of increased competition in the manufacturing market for tiles. The decline in margins in this segment had a significant impact on Group margins.


The Supply and Support Services segment was impacted by local port congestion issues, with supply delays ranging from 30-40 days on average. The segment’s revenue declined by 8.2% y-y, and trading margins fell by 27.3%, as ITE looked to absorb margin pressure as a result of higher import prices as a way to support consumers and improve volumes within the Retail segment.


Management does not anticipate that alternative sources of LNG will be available before the LNG ‘day zero’. For that reason, they have a backup plan to make use of coal gas in the short term. However, this would require capex investment to implement at their factories.