Release Date: December 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: There is talk that the next presidential administration in the United States might implement some tariffs. How might this affect Natuzzi? A: Antonio Achille, CEO, responded that while they cannot predict the administration's decisions, Natuzzi is preparing to handle potential changes in logistics and tariffs. They are establishing multiple production areas, including a new platform in Vietnam, to navigate such circumstances. Vietnam, unlike China, does not have tariffs when exporting to the US, which could be advantageous.
Q: Can you comment on the order flow improvements in Q4 following Q3? A: Antonio Achille noted that since week 40, they have observed a positive trend in order flow compared to previous weeks. While the situation remains volatile, the last 10 weeks have shown better performance. They are hopeful for specific measures in 2025, such as interest rate changes and stimulus packages in China, which could benefit the furniture industry.
Q: Regarding the move from Shanghai, what is the expected impact on production costs or gross margin? A: The Shanghai plant closed at the end of September, and production moved to Quanjiao, which is ramping up capacity. Achille expects a 200 to 300 basis point improvement in gross margin due to this move, with full efficiency anticipated in 2025.
Q: Can you quantify the potential size of the new commercial division, particularly in Dubai, over the next year or two? A: Antonio Achille explained that while they do not provide specific guidance, the new division has a five-year business plan aimed at building incremental business in the contract and trade sectors. The division is expected to contribute significantly to revenue, with a target of being margin accretive.
Q: Without the restructuring charge, Natuzzi was profitable on an operating basis. Is it safe to say that above certain revenue levels, the company should sustain profitability? A: Achille confirmed that they have significantly lowered their breakeven point, which used to be over EUR100 million per quarter. Now, the breakeven is around EUR75 million to EUR85 million, meaning incremental business above this level should result in higher EBITDA and cash conversion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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