South African tycoon Giovanni Ravazzotti's Italtile profit falls 14% on cheap imported tiles

Italtile, the tile and bathroom group Giovanni Ravazzotti founded in 1969, said annual profit fell 14% as a flood of cheap imported tiles undercut its factories and South African consumers cut back on home improvements.

Trading profit dropped to $112 million (R1.8 billion) in the year to June 30 from R2.1 billion a year earlier. Headline earnings per share fell 9% to 113.4 cents. System-wide turnover was flat at $706 million (R11.3 billion).

The damage was concentrated in manufacturing. Ceramic Industries, the arm Ravazzotti built to shield the group from foreign competition, saw sales slip 1.1% and remained the main drag on the year. Global over-capacity has pushed cheap product into South Africa and pulled prices down across the industry, while rising fuel, gas and municipal costs added to the squeeze.

Retail held up better, but only just. Selling prices across CTM, Italtile Retail and TopT rose 1.8% while sales grew 0.4%, meaning customers bought less. The group lifted retail margins half a percentage point, and its online stores drew more traffic and sales.

Sales through the import supply chain fell 6.4%. A stronger rand and better buying recovered some of the margin lost.

Relief arrived, though too late for these numbers. South Africa imposed provisional anti-dumping duties on ceramic and porcelain wall and floor tiles from India, Mozambique, Zambia and Zimbabwe in July, three weeks after Italtile's year closed. Rates run as high as 231.62% for Zimbabwe.

Chief executive Brandon Wood said the measures should help once imported stock already sitting in warehouses works through the market, and warned that "the risk of circumvention remains a factor to monitor closely." The company plans to keep pressing the authorities for a longer-term fix.

The duties are temporary. Importers pay now while the International Trade Administration Commission finishes its investigation, and the payments run until Jan. 9, 2027. If the commission finds the dumping harmed local producers, they become permanent. If not, importers get their money back.

Italtile and Rayal Industries brought the case. Lance Foxcroft, who ran Italtile from January 2022, told investors in March he hoped for interim measures before the end of the year while warning the process could take 18 months. He left on June 30. Wood, previously chief operating officer, took over the next day and inherited the win.

Despite the weaker year, the board kept paying shareholders. It declared an ordinary dividend of 45 cents a share and a special dividend of 25 cents, down from the 98-cent special a year ago. The group also spent $12.6 million (R201 million) buying back stock.

Cash is thinner. Net cash fell to $106 million (R1.7 billion) from R2.2 billion.

Ravazzotti controls 56.46% of Italtile through the family vehicle Rallen, about 746.24 million shares, leaving a free float of just over 28%. He remains on the board of a group that now runs 211 stores including seven online, holds 95.47% of Ceramic Industries and 71.54% of Ezee Tile, and owns an extensive property portfolio alongside its factories.

The tile adhesive business faced a version of the same problem, competing against cheaper and inferior alternatives.

Whether the duties change the picture depends on how much imported stock is already in the country and how quickly it clears. Italtile has said the market is oversupplied. Until that unwinds, the protection it spent two years pursuing will show up in the trade statistics before it shows up in the accounts.