Italtile prospers as ‘home improvement’ trend continues

Italtile, a darling of the JSE, continues to go from strength to strength and has produced a stellar set of results. The group benefitted from the ‘home improvement’ trend, with many households diverting spend on travel and leisure to focus on revamping their number one asset. Italtile’s peers, namely Cashbuild and Massmart owned Builders Warehouse, also experienced an uptick in demand for its products. However, Italtile is a best-in-class retailer and its numbers underpin the reasons why it has been one of the best performing stocks on the local bourse over the last 10 years. Whilst revenue experienced a double-digit increase, trading profit and earnings ballooned around 40%. This shows astute cost containment and a generally well run operation, with shareholders being the ultimate beneficiary receiving a juicy half year dividend. – Justin Rowe-Roberts

Italtile SENS statement:

Interim financial results for the six months ended 31 December 2020

  • System-wide turnover R6.2bn 2019: R5.4bn up 14%
  • Trading profit R1 420m 2019: R1 029m up 38%
  • Earnings per share 77.9 cents 2019: 55.3 cents up 41%
  • Adjusted earnings per share* 77.9 cents 2019: 58.4 cents up 33%
  • Net cash R1.1bn 2019: R0.7bn up 62%
  • Headline earnings per share 77.1 cents 2019: 55.3 cents up 39%
  • Adjusted headline earnings per share* 77.1 cents 2019: 58.4 cents up 32%
  • Ordinary dividend per share 31.0 cents 2019: 23.0 cents up 35%
  • Net asset value 517 cents 2019: 450 cents up 15%
  • Store network 203 June 2020: 198 up 3%

“Partnership with our people is a very strong culture in our business and it is extremely satisfying that through our widespread profit-sharing schemes, they were appropriately rewarded for their extraordinary efforts during the reporting period.” Jan Potgieter, CEO


It is rewarding to report that despite the unprecedented trading environment, the Group has delivered a pleasing performance for the review period, recording double-digit sales and profit growth across all of our operations: retail brands, supply chain importers and manufacturing businesses.

These gratifying results are attributable to the following factors, augmented by the impact of the pandemic on consumers’ enforced time in the home and altered spending priorities:

  • the extraordinary response of our team to adjusting to the new normal;
  • productivity drive and cost leadership gains across the business derived from ongoing improvements made over the past 18 months;
  • continued investment in technology for the future – both in our factories and across the Group’s omnichannel trading platforms; and
  • the power of our strategically robust integrated business model, which is volume-driven, cash generative and centred on a high-performance culture.

Operational review

In keeping with the long-standing philosophy that growth in the Group will be derived from the internal levers within management’s control, our key focus areas centred on sales levers, range enhancement, cost leadership, productivity improvements and performance culture.

Good progress was achieved by the business as follows:

  • continued to compete aggressively, gain share of the wallet through better execution of retail excellence disciplines and consistent investment in the shopping experience;
  • improved the management of stockholding and working capital;
  • intensified operational efficiencies and productivity in the stores and between the stores and the supply chain; and
  • reduced manufacturing production costs to entrench the Group’s position as the preferred import substitute.

Ordinary cash dividend announcement

The Group’s dividend cover is two and a half times. The Board of directors of Italtile (“Board”) has declared an interim gross cash dividend (number 109) for the review period ended 31 December 2020 of 31 cents per ordinary share (2019: 23 cents), to all shareholders recorded in the shareholder register of Italtile as at the record date of Friday, 5 March 2021.


Management anticipates that varying degrees of lockdown will continue to be implemented over the next year which, while damaging the economy generally, will likely favour the prevailing home improvement trend. Albeit that consumers will face greater financial hardship and constrained disposable income in the year ahead, current evidence indicates that they

will continue to spend on their homes when funds permit; low, single-digit interest rates are expected to be retained for the short to medium term, which will further encourage homeowners to invest in their primary asset.

In this light, management is optimistic about the Group’s growth prospects and accordingly, has developed strategies to optimise on opportunities presented; we will also continue to roll out capital expenditure projects and new store

openings where proven consumer demand exists. Simultaneously, preparations are in place to manage the anticipated continued disruption of imported product, and to ensure uninterrupted supply from our own and other local manufacturing operations to all of our markets in South Africa and the rest of Africa.


Should current trading conditions and Covid-19-related restrictions remain stable in the forthcoming six months, we anticipate that the Group will deliver double-digit sales and profit growth on that reported in the prior corresponding period, given that the comparison will be against five months of trading in FY2020. However, should trading conditions deteriorate and/or Covid-19 restrictions be intensified resulting in an adverse impact on our operations, this guidance will no longer apply. In this regard, management will endeavour to continue to provide regular, transparent communication to the market over the forthcoming period.

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