Italtile profit up despite tough trading

Johannesburg - Italtile [JSE:ITE], the South African retailer of imported and local ceramic tiles, sanitaryware and bathroom accessories, on Tuesday reported a 5% increase in headline earnings per share despite a sluggish trading environment.

The company posted earnings and headline earnings were 34.6c in the year to end June 2011, compared to 33.1c a share in the previous year.

Profit for the year was 20% higher at R339m from R281m the year before.

Turnover increased 10% to R3.02bn from R2.75bn last year with growth achieved across Italtile, CTM and TopT.

Operating profit grew 15% to R448m from R389n last year.

A final dividend of six cents per share has been declared, which together with the interim dividend produces a total dividend declared for the year of 12c. This compares to a final dividend of five cents and a total dividend of 11c last year.

"The group's trading environment remained sluggish: the new build market continued to be restrained, whilst the renovation segment fared only slightly better with homeowners favouring investment in home improvements over the uncertainty of new property acquisitions," said Italtile CEO Peter Swatton.

"Competition intensified, featuring aggressive trading and price-cutting, and further consolidation was experienced in the industry. In addition, the strong rand favoured opportunistic importing, resulting in an influx of imported product," Swatton said.

Looking ahead, the company cautioned that the retail environment in South Africa will continue to face challenges presented by subdued trading conditions.

"The resultant constraints, together with new consumer spending behaviour and the likely advent of international players in the local market will serve to shape the future of the industry in this country," Italtile said in the commentary accompanying its results.