Italtile’s (ITE) top line contracted for the full year, but through effective cost management, it was able to protect margins. The continued underperformance of CTM had a negative impact on the Retail segment. Many changes have been implemented to get the marketing and pricing of CTM right, and it will likely take time for this brand to recover. In contrast, TopT was the standout brand in Retail. The acceleration of TopT stores is expected to continue in FY26, with at least five stores in the pipeline, and with significant runway over the medium term. We are concerned about the upcoming festive period, which in FY25 was supported by Two-Pot retirement withdrawals, and it remains to be seen if that level of consumer spending can be sustained.
Capacity utilisation at the tile facilities remains a snag on the overall profitability of the Manufacturing segment. Some tailwinds may come with the exit of a competitor manufacturer, Johnson Tiles. A shortfall of 4-5 million square meters of tiles is expected in the market, with Ceramic Industries already preparing its Gryphon and Pegasus facilities to capture more volumes. There is also the potential benefit of being a supplier of the retail chain Tile Africa, as well as picking up some commercial project work that Johnson Tiles had conducted.
Supply and Support Services’ results were softened by the performance of the DC, as well as the buying strategy of the Tivoli brand. With the DC, the consolidation of Cedar Point Durban will be in the base, and with Tivoli and CTM, ITE has opened a 24-hour helpline to improve the customer offering and regain market share.